Is the Solar Tax Credit Ending for Businesses?

Yes, for most new projects. Under the 2025 tax law, business solar facilities that began construction after July 4, 2026 get the clean electricity investment or production credit only if they're placed in service by December 31, 2027. Facilities that began construction by July 4, 2026 aren't subject to that cutoff, and the home solar credit ended for property placed in service after December 31, 2025.

6%The investment credit's base amount is 6% of the qualified investment, rising to 30% for facilities that meet prevailing wage and registered apprenticeship requirements.
30%The investment credit's base amount is 6% of the qualified investment, rising to 30% for facilities that meet prevailing wage and registered apprenticeship requirements.

The federal solar tax credit for businesses is ending for most new projects. Business solar now runs through the clean electricity investment credit (section 48E) and the clean electricity production credit (section 45Y). The 2025 tax law (Public Law 119-21) ends both credits for a solar facility placed in service after December 31, 2027, if its construction began after July 4, 2026. Because July 4, 2026 has passed, a solar project that hasn't begun construction by then must be placed in service by the end of 2027 to get either credit. The investment credit's base amount is 6% of the qualified investment, rising to 30% for facilities that meet prevailing wage and registered apprenticeship requirements.

Last checked: November 3, 2026. This page explains the rules only. It is general information, not legal, tax, or financial advice.

The short version

Began construction by July 4, 2026: not subject to the December 31, 2027 cutoff. The usual beginning-of-construction and continuity rules still apply.
Began construction after July 4, 2026: the facility must be placed in service by December 31, 2027 to get the section 48E or 45Y credit.
"Beginning construction" means physical work of a significant nature, such as installing racks to hold the panels. Planning, permits, financing and clearing a site don't count.
Small solar (1.5 megawatts AC or less) may also use a five percent cost safe harbor to show construction began on time.
You can't claim both the investment credit and the production credit for the same facility.
Home solar is different: the residential clean energy credit isn't available for property placed in service after December 31, 2025, and landlords who don't live in the home can't claim it.

Who qualifies

Businesses and other taxpayers that own a qualified solar facility placed in service after December 31, 2024 and meet the timing rules above.
Tax-exempt organizations and government entities may be able to use elective payment (direct pay) or transfer the credit. Pre-filing registration with the IRS is required first.
Taxpayers that are specified foreign entities or foreign-influenced entities can't claim the credit for tax years beginning after July 4, 2025. Projects also face new limits on material assistance from prohibited foreign entities.
Older solar property whose construction began before 2025 falls under the earlier energy credit (section 48), also claimed on Form 3468.

How to get it

How to get started

Pin down your construction start date. Keep proof of when physical work of a significant nature began, such as contracts and dated records of on-site or off-site work.
Confirm your placed-in-service target. If construction began after July 4, 2026, the facility must be in service by December 31, 2027.
Keep construction going. The IRS treats a facility as meeting the continuity requirement if it's placed in service by the end of the fourth calendar year after the year construction began.
Check bonus amounts: prevailing wage and registered apprenticeship requirements (Form 7220 verification), domestic content and energy community rules.
Claim the investment credit on Form 3468 with your annual return for the first year you report it. Production credits use their own forms, such as Form 7211.
Tax-exempt or government owner? Complete IRS pre-filing registration before electing direct payment or transfer.

Programs that may match

Look beyond the solar credit

Solar equipment and other business property may also qualify for faster write-offs: see bonus depreciation in 2026.Building or upgrading a commercial building? See the 179D energy-efficient commercial buildings deduction.See what the 2025 tax law changed for small businesses.Find other programs you may qualify for with FundPlenty's free match at fundplenty.com.

FAQ

When did the business solar tax credit end?

It hasn't ended for every project. For a solar facility whose construction began after July 4, 2026, the section 48E and 45Y credits end if it's placed in service after December 31, 2027. A facility that began construction by July 4, 2026 isn't subject to that termination date.

How much is the business solar investment credit?

The clean electricity investment credit's base amount is 6% of the qualified investment, increased up to 30% for facilities meeting prevailing wage and registered apprenticeship requirements. It can go up by another 10 percentage points for domestic content and another 10 for being located in an energy community.

What counts as beginning construction for solar?

Under IRS Notice 2025-42, the Physical Work Test is generally the only method: physical work of a significant nature must begin, such as installing racks or other structures to affix panels to a site. The notice applies to facilities whose construction didn't begin before September 2, 2025.

Can a small solar project use the 5% safe harbor?

Yes, if it's a low output solar facility with maximum net output of not greater than 1.5 megawatts (AC). Those facilities can use either the Physical Work Test or principles similar to the Five Percent Safe Harbor to show construction began before July 5, 2026.

Is the home solar credit still available?

No, for new installs. The IRS says the residential clean energy credit (section 25D) isn't allowed for expenditures made after December 31, 2025, and an expenditure counts as made when installation is completed, not when you pay.

What form do I use to claim the business solar credit?

Form 3468, Investment Credit, filed with your annual return, for the investment credit. If you claim the increased amount for meeting prevailing wage and apprenticeship requirements, you must also file Form 7220 for each facility.