Tax Credits for Commercial Solar—What’s Changing in 2025?

For years, the federal government has offered tax credits to businesses that install solar panels, helping them cut operating costs, boost profits, and reduce carbon emissions. 

But that’s changing with the passage of a new law, H.R.1, aka the “One Big Beautiful Bill Act” (OBBBA). The law, signed on July 4th, 2025, implements major changes to long-standing clean energy tax credits for commercial solar, including the 30% Investment Tax Credit (ITC) and the Production Tax Credit (PTC). 

If your business is considering solar, you still have time to lock in big tax savings, but the clock is ticking. In this guide, we explain what’s changing and how to claim your credit before it’s too late. 

Quick Overview 

New federal legislation is eliminating key tax credits for commercial solar projects. To claim the full 30% ITC or the full PTC, you must: 

• Start construction before July 4, 2026
• Place your system in service by December 31, 2027

Waiting too long could mean missing out entirely and paying 30% more for the same solar installation. Schedule a consultation with Premo Solar today to get started before it’s too late. 

Key Changes to Commercial Solar Tax Credits Under OBBBA 

The OBBBA affects many clean energy incentives, including the two most important federal tax credits for commercial solar:

• Section 48E – Investment Tax Credit (ITC)
• Section 45Y – Production Tax Credit (PTC)

Here’s what’s changing: 

1. Tightened Timelines 

The tax credits aren’t going away immediately, but under the new law, you have much less time to claim them. 

If you start a new commercial solar project after July 4, 2026 (12 months out from the law’s enactment), you must complete your installation and place the system in service by December 31, 2027, to qualify for the ITC or the PTC. 

If you begin construction before July 4, 2026, the standard four-year “continuity safe harbor” applies, giving you more time to complete your installation. The continuity safe harbor rule allows you to claim the full tax credit for a solar project, even if it’s not fully installed and operational by the end of the year construction begins, as long as it’s completed within four years. 

2. FEOC Restrictions Now Apply 

Going forward, projects must comply with new “foreign entity of concern” (FEOC) rules. If your solar project sources components from countries flagged as FEOCs, it may no longer be eligible for federal tax credits.

3. Battery Storage Is Not Affected 

The good news is that energy storage systems are not affected by the timeline changes. You can still claim the full 30% ITC for an energy storage system placed in service after July 4th, 2026.  

More Changes May Be Coming Soon 

On July 7, 2025, President Trump issued an Executive Order titled Ending Market Distorting Subsidies for Unreliable, Foreign-Controlled Energy Sources. 

The order directs the Treasury Department to complete the following within 45 days of the enactment of the OBBBA: 

• Strictly enforce the termination of the ITC and PTC for solar and wind projects
• Issue new guidance on what qualifies as the “beginning of construction,” limiting safe harbor rules
• Finalize and enforce FEOC compliance requirements 

What Does This Mean for Your Business or Organization? 

Commercial solar is still a smart investment, but the window for federal tax incentives is closing fast. Once they’re gone, commercial solar installations will become considerably more expensive. 

At Premo Solar, we can help you get your project off the ground before the deadline, but you need to start soon. Solar installations, especially large and complex commercial projects, take time. Contracts need to be signed, permits approved, equipment ordered, and construction started, all within less than a year to ensure tax credit eligibility.

If you’re considering solar for your business, don’t wait. Reach out now to schedule a consultation and get your project moving while incentives are still available! 

Don’t miss out on commercial solar tax credits! Call 831-901-3352 to learn more about your options.