Section 48E Investment Tax Credit (ITC) 2026: What You Need to Know

Is the Section 48E Investment Tax Credit Still Available for Businesses in 2026?

Yes. The federal commercial Section 48E tax credit is still active in 2026, even though the residential version expired. Businesses that install solar — with or without battery storage — can still claim a federal tax credit worth 30% of the system's eligible cost, and in many cases significantly more once bonus incentives are factored in. This puts commercial and industrial property owners in a very different position than homeowners this year, and it's worth understanding exactly why.

What Changed — Residential vs. Commercial After the OBBBA

For years, homeowners and businesses both claimed a federal solar tax credit under fairly similar rules. That changed with the One Big Beautiful Bill Act (OBBBA), which restructured federal energy tax policy and pulled the residential and commercial paths apart.

Why the Residential Credit Ended but the Commercial Credit Didn't

The residential solar tax credit (Section 25D) officially ended on December 31, 2025. Homeowners installing solar today no longer have a federal credit to claim.

The commercial credit followed a different track. It was folded into a broader, technology-neutral incentive under Section 48E of the Internal Revenue Code, and lawmakers gave the commercial and industrial sector a longer runway than residential — largely because commercial-scale clean energy projects are viewed as a bigger lever for grid capacity and economic investment. The result: businesses, nonprofits, and public entities still have a meaningful window to claim the credit, while individual homeowners do not.

The Current Rate: 30% Base Credit Under Section 48E

For a commercial solar project, the base federal tax credit is 30% of the total eligible project cost. That typically includes:

• Solar panels
• Inverters
• Racking and mounting hardware
• Wiring and electrical work
• Installation labor
• Battery storage, whether installed alongside the panels or added later

On a $200,000 commercial installation, a 30% credit works out to a $60,000 reduction in the business's federal tax liability — a dollar-for-dollar offset, not just a deduction.

Projects at utility scale (generally over 1 megawatt) have an added requirement: to get the full 30%, the project has to meet prevailing wage and apprenticeship standards during construction. Most standalone commercial and small-to-midsize industrial installations fall well under that threshold and qualify for the full rate without those requirements attached.

Key 2026–2027 Deadlines

This is where a lot of businesses get confused, so it's worth laying out clearly.

The July 4, 2026 "Begin Construction" Milestone

Under the transition rules that followed the OBBBA, projects that formally began construction by July 4, 2026 locked in the 30% credit under a more flexible timeline, giving those projects up to four years to be completed and placed in service.

That date has now passed. If your business didn't start construction by then, it doesn't mean the credit is gone — it means you're on a different, tighter path.

The December 31, 2027 Placed-in-Service Deadline

Projects starting construction now can still claim the full 30% credit, but the system has to be placed in service — meaning fully installed, inspected, and operational — by December 31, 2027. There is no phase-down or reduced rate after that date. The Section 48E credit simply ends for new projects once the deadline passes, regardless of a project's size or start date.

In practical terms, that means the runway is shrinking, not stretching. A commercial rooftop or ground-mount system typically takes anywhere from a few months to about a year from signed contract to interconnection, depending on complexity, equipment availability, and utility approval timelines. Businesses that want certainty around claiming this credit are better served by starting the process well before the deadline rather than waiting until early 2027.

Who Qualifies

The commercial solar tax credit isn't limited to traditional for-profit businesses. Eligible entities include:

• For-profit businesses of any size, from small commercial buildings to large industrial facilities
• Nonprofits
• Municipalities and local governments
• School districts
• Tribal governments and rural electric co-ops

Tax-exempt entities that can't normally benefit from a tax credit (because they don't owe federal income tax) can still access the value of the credit through a direct pay, or "elective pay," mechanism. Businesses that owe tax but can't fully use the credit themselves have the option to transfer it to another taxpayer. Both of these mechanisms are covered in more depth in our companion article on how the credit actually works.

Quick-Reference: Commercial vs. Residential Solar Incentives in 2026

Frequently Asked Questions

Is the commercial solar tax credit the same as the old ITC? It's the direct successor to it. The credit businesses have claimed for years under the Investment Tax Credit (ITC) framework now operates under Section 48E, a technology-neutral version of the same basic incentive — a percentage of eligible project cost credited against federal tax liability.

Do I need to own the system to claim it? In most cases, yes — the credit generally goes to whoever owns the solar system, which is why financing structure matters. A business that purchases its system outright or finances it as a loan typically claims the credit directly. Systems installed under a third-party lease or power purchase agreement usually mean the third-party owner claims the credit instead, not the business using the electricity.

What happens after 2027? As of current law, the Section 48E credit ends for new projects that aren't placed in service by December 31, 2027, with no announced phase-down. Businesses evaluating solar in 2026 or early 2027 are working against a real, fixed deadline rather than an open-ended incentive.