Business solar credit (closing)
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Solar tax credits changed sharply with the 2025 tax law. The home solar credit is gone: it ended for costs paid after December 31, 2025. Business solar projects can still earn a credit, but the deadlines are tight.
A project that began construction by July 4, 2026 isn't held to the 2027 deadline. A project started after that has to be placed in service by December 31, 2027, or it loses the credit entirely. Either way, the equipment can also be depreciated.
How it works
Home and business solar are now different rules. The home credit (§25D) is gone: it ended for costs paid after December 31, 2025. A business solar project can still earn the investment or production credit (§48E or §45Y) in one of two ways. Projects that began construction by July 4, 2026 are not held to the 2027 deadline. Projects started later must be placed in service by December 31, 2027. Either way the equipment can also be depreciated.
What makes it hold up
- The date construction began, proven by physical work on the project (paying 5% of the cost counts only for small solar of 1.5 MW or less)
- The date it’s placed in service
- Invoices, which company owns it, and where the parts came from (projects started after 2025 must meet the foreign-supplier rules)
Risks
Moderate. A project started after July 4, 2026 that misses the end-of-2027 in-service date loses the credit entirely. Credits from passive solar investments only offset tax on passive income.
Questions to ask your CPA
- When did construction begin on our project, and can we prove it with physical work?
- If it began after July 4, 2026, will it be in service by the end of 2027?
Common questions
Can I still get a credit for solar on my home?
No. The home credit ended for costs paid after December 31, 2025.
How do I prove when construction began?
Generally with physical work of a significant nature on the project. Paying 5% of the cost counts only for small solar projects of 1.5 megawatts or less.
Are there rules about where the parts come from?
Yes. Projects that begin construction after 2025 must meet foreign-supplier rules that restrict certain components.
What if I'm a passive investor in a solar project?
Credits from a passive investment generally only offset tax on passive income.
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Education, not advice. Tax law changes and every situation is different, so confirm the details with your CPA or tax advisor before acting. This page was last checked against tax law as of October 2026, including the 2025 tax law, in October 2026.