Commercial Solar Incentives Are Changing: What to Know After July 2025
If your business is thinking about solar energy, major policy changes took effect after the first week of July, that might significantly impact your expenses, savings, and planning timeline. The rules around commercial solar installation, from tax credits to equipment sourcing, are tightening and timing is everything.
We will guide you about what business owners, facility managers, and solar investors need to know now to maximize their savings and avoid losing out on valuable federal incentives.
1. The 30% Federal Solar Tax Credits Deadline
The Investment Tax Credit (ITC), a powerful incentive covering 30% of solar project costs, is still available for commercial projects. But the latest legislation introduced hard strict deadlines that could impact your eligibility.
To qualify for the full 30% tax credit, your business must either:
- Start physical construction by July 4, 2026, or
- Complete the installation by December 31, 2027
This credit reduces your federal income tax liability, making solar installations more financially accessible. But if you miss these dates, the credit could phase down or disappear completely, based on future policy updates.
Note: If you are serious about solar, start your project as soon as possible to lock in the 30% savings.
2. Paperwork Alone No Longer Locks in the Tax Credit
Under the old rules, before July 2025, businesses could secure the 30% tax credit with minimal action, like:
- Signing a contract
- Paying a small deposit
- Ordering solar panels
These steps were enough to show “construction has started”, even if no work is done in the first place. This allowed several companies to delay actual installation while still qualifying for tax incentives.
However, starting July, 2025, that approach no longer works.
New Rule: Real Construction Must Be Underway
To claim the 30% ITC under the new guidelines, you must demonstrate tangible, physical construction activity, like:
- Workers on-site beginning excavation, trenching, or structural mounting
- Valid, active construction permits
- Verifiable, visible progress at the installation site
Simply producing paperwork, contracts, or invoices won’t satisfy the new standard. The IRS now requires tangible progress, not just intent.
Tip: Document your construction milestones clearly. Photos, permit records, and work logs can help prove eligibility if you are ever audited.
3. Domestic Content Bonus Is Still Available, But Stricter
The Domestic Content Bonus offers an extra 10% tax credit if a certain percentage of your project is built using American-made materials. But starting in July 2025, qualifying for this bonus got harder. To qualify now, projects must meet two key thresholds:
- 100% of steel and iron used like mounting structures, must be U.S. made.
- At least 40% of manufactured products like solar panels, inverters, etc. must come from domestic sources for commercial projects.
This bonus can stack on top of the 30% ITC but only if you plan ahead and source correctly.
Tip: Ask your installer about “Domestic Content Compliant” options. These pre-vetted equipment packages are designed to meet the new criteria.
4. Location-Based Bonuses Still Apply, With New Requirements
In addition to the Domestic Content Bonus, two location-based tax bonuses remain:
- Energy Community Bonus (10%) for projects in former fossil fuel-dependent areas.
- Low-Income Bonus (10–20%) for projects serving disadvantaged or underserved communities.
- Both incentives can stack with the ITC, potentially bringing your total tax credit to 50% or more.
However, eligibility must now be verified through federal tools and databases, and documentation is required at the time of filing.
Tip: Your solar provider should offer a site eligibility check to confirm whether your location qualifies for any bonus credits.
5. Supply Chain and Labor Delays Can Cost You Credits
With tighter timelines and more complex rules, many solar projects are now facing bottlenecks, especially in permitting, labor, and materials. Common delays include:
- Long wait times for transformers and inverters
- Permitting backlogs at the local level
- Shortages of certified labor teams
- Delays in securing U.S.-made components
Each delay puts your project’s timeline and tax credit eligibility at risk.
Tip: Start early and work with an experienced, vertically integrated installer who handles permitting, engineering, and procurement in-house.
6. Depreciation Still Enhances Solar ROI
Despite policy tightening, solar remains a highly profitable investment thanks to federal accelerated depreciation.
Under the Modified Accelerated Cost Recovery System (MACRS), you can depreciate most commercial solar systems over five years. Bonus depreciation (100% in year one for systems installed before 2027) also applies.
When combined with the ITC, this can cut your effective solar cost by up to 60%, leading to 4 to 6 year payback periods in many cases.
Tip: Work with a tax advisor or solar finance consultant to model your project’s return, including incentives, depreciation, and utility savings.
7. What Your Business Should Do Now
If your company is considering solar within the next two years, don’t delay. Follow this short checklist to stay on track:
- Request a solar feasibility study
- Begin permitting and design work ASAP
- Secure U.S.-made materials early
- Start construction before July 2026
- Document all progress carefully
- Verify your eligibility for all bonus credits
Acting now could be the difference between maximizing federal benefits or losing them entirely.
Conclusion
The commercial solar landscape changed significantly after July 2025. Businesses can still capitalize on robust tax credits but the bar is now higher, and deadlines are firm.
Whether you’re driven by energy cost savings, ESG goals, or long-term investment value, solar remains a compelling opportunity. But successful projects will depend on smart planning, early action, and careful documentation.