If you're considering a solar energy project for your business or investment portfolio, 2025 may be your last—and best—opportunity to maximize tax savings under current law.
With the passage of H.R. 1 (“One Big Beautiful Bill”) on July 4, 2025, the tax landscape for clean energy is shifting. But there’s good news: taxpayers who act this year can still access the full 30% Investment Tax Credit (ITC) and now benefit from permanent 100% bonus depreciation for qualifying property.
Let’s break down what that means:
The 30% Investment Tax Credit (ITC) Is Still Available in 2025
The ITC remains fully in effect through the end of 2025 for commercial solar projects. This credit allows you to offset 30% of eligible project costs against your federal tax liability.
For example, on a $100,000 solar installation, the ITC alone could reduce your tax bill by $30,000. However, beginning in 2026, the law will abruptly phase out the 30% rate, and stricter rules around construction start dates and equipment sourcing will apply.
100% Bonus Depreciation Is Now Permanent
In addition to the ITC, the new law reinstates and makes permanent 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. This includes most tangible personal property with a recovery period of 20 years or less—such as:
- Solar panels and related equipment
- Batteries, inverters, and electrical systems
- Office furniture, computers, and land improvements
Businesses can fully expense both new and used assets in the first year, providing a major cash flow and tax planning advantage.
Combine Both Tax Breaks for Maximum Savings
In 2025, commercial taxpayers can stack the 30% ITC and 100% bonus depreciation—allowing many to recoup 60% or more of their total project cost in the first year through tax benefits alone.
This combination of incentives is not expected to be available after 2025 without additional compliance requirements or reduced benefit levels.
Deadlines to Keep in Mind
- December 31, 2025: Begin construction by this date to avoid “Prohibited Foreign Entity” (PFE) sourcing restrictions.
- July 4, 2026: Start construction by this date to avoid a 12/31/2027 placed-in-service deadline (but PFE rules still apply).
- December 31, 2027: If your project starts after 7/4/26, it must be operational by this date to qualify.
Key Takeaway
2025 is a rare alignment of incentives: a generous tax credit, permanent bonus depreciation, and no foreign content restrictions—yet.
If your clients or business are considering a solar investment, this is the year to act.
