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Stack up to 70% in federal tax credits. MACRS depreciation. Direct Pay for tax-exempt entities. The most generous incentives in solar history.
30%
Base ITC
Up to 70%
Max Stacked ITC
20% in 2026
MACRS Bonus
Tax-exempt entities
Direct Pay
The 2026 ITC under Section 48E provides a 30% base credit (with prevailing wage/apprenticeship), stackable with +10% domestic content, +10% energy community, and +10-20% low-income bonuses for up to 70% total. MACRS 5-year depreciation with 20% bonus adds another 15-20% in tax savings. Tax-exempt entities can use Direct Pay for cash payments. Projects must begin construction before July 4, 2026.
30% (6% without prevailing wage)
The Section 48E Investment Tax Credit provides a 30% credit on commercial solar installations that meet prevailing wage and apprenticeship requirements. This is the cornerstone federal incentive for commercial solar.
5-year depreciation + 20% bonus (2026)
Modified Accelerated Cost Recovery System (MACRS) allows businesses to depreciate commercial solar equipment over 5 years, with 20% bonus depreciation in 2026.
+10% bonus
An additional 10% ITC bonus for commercial solar projects that use US-manufactured components meeting specific domestic content thresholds.
+10% bonus
An additional 10% ITC bonus for commercial solar projects located in designated energy communities, including brownfields, coal closure areas, and fossil fuel employment areas.
Up to 70% cash payment
Direct Pay allows tax-exempt entities including schools, municipalities, nonprofits, and tribal entities to receive the ITC as a direct cash payment from the IRS.
Compliance requirement
Foreign Entity of Concern (FEOC) restrictions prohibit the use of Chinese, Russian, Iranian, and North Korean components in ITC-eligible solar projects. Understanding compliance is critical for maintaining tax credit eligibility.
142 days until July 4, 2026 deadline
Projects must begin construction before this date for current IRA rules
FEOC battery restrictions take effect
Battery storage components from FEOC entities no longer qualify for ITC
IRS finalizes domestic content guidance
Clear rules for calculating manufactured product percentages
MACRS bonus depreciation drops to 20%
Down from 40% in 2025, reducing first-year tax benefit
IRA construction start deadline
Projects must BEGIN CONSTRUCTION before this date for current IRA Section 48E rules. Proposed legislation could modify or repeal ITC.
MACRS bonus depreciation drops to 0%
No bonus depreciation available; standard 5-year MACRS only
FEOC threshold increases to 50%
Higher domestic/non-FEOC content required for manufactured products
The maximum stacked ITC is up to 70% of total project cost: 30% base ITC + 10% domestic content + 10% energy community + 20% low-income community bonus. Plus MACRS 5-year depreciation adds another 15-20% in tax savings.
Our team helps you navigate ITC stacking, MACRS depreciation, and state incentives to minimize your net cost.