Now is a critical moment to evaluate solar for commercial properties. The federal Investment Tax Credit (ITC), which significantly reduces the cost of solar, is phasing out. Property owners and developers should be aware of key deadlines that impact project eligibility.
The ITC currently allows businesses to claim 40% – 50% of the cost of a solar and battery system, as a tax credit. In addition, accelerated depreciation further enhances financial returns by allowing a larger portion of the system cost to be depreciated.
Recent federal legislation moved up the end-date for this incentive: commercial solar projects must be fully completed by the end of 2027. While this may appear to allow sufficient time, project timelines are often affected by factors such as utility interconnection approvals, permitting processes, and jurisdictional plan reviews.
These challenges were evident when the residential solar tax credit ended last year. A surge in demand led to extended processing times and uncertainty for property owners. Similar conditions are expected as the commercial tax credit ends next year.
Commercial projects have an opportunity to reduce this risk by “Safe Harboring” before a key deadline, July 4, 2026. By beginning the design and engineering process before early July 2026, projects will qualify for an extended completion timeline through 2029. This allows additional time for approvals and construction while preserving eligibility for the tax credit.
If you would like to discuss securing this tax incentive for your project, by Safe Harboring before the end of June, you can consult with Xero Solar’s experienced professionals to determine the best path forward.
