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Use the free estimator for a preliminary layout, or share your preferred response method with the commercial team. Final feasibility still requires site, utility, and engineering review.
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.
Before anything else: the timing
The Section 48E begin-construction window closed July 4, 2026: projects that began construction on or before that date may use the longer continuity pathway. Commercial solar projects starting now generally must be placed in service by December 31, 2027. The statutory credit is 6%; it can increase to 30% when the applicable prevailing-wage and registered-apprenticeship requirements are met.
Energy storage technology is not subject to the December 31, 2027 placed-in-service deadline or the July 4, 2026 begin-construction trigger — both apply to applicable wind and solar facilities only, and Section 48E(e)(4)(C) expressly excepts energy storage technology (IRS Notice 2025-42, section 2.02). A standalone commercial battery remains eligible for the statutory 6% Section 48E credit, increased to 30% when the applicable wage and apprenticeship requirements are met, under the standard clean-electricity phase-out that starts at the later of 2032 or when U.S. greenhouse gas emissions from electricity are 25% of 2022 emissions or lower.
Direct Pay changes only how a tax-exempt owner receives the credit, not when the project has to be placed in service.
Schools pre-register with the IRS, install the solar system, and file for Direct Pay with their annual tax return. The IRS sends a direct cash payment equal to the ITC amount (30% base + any bonuses). A $500K school solar project could receive $150K-$350K in direct cash.
Converts ITC from tax credit to direct cash payment
Available only to tax-exempt entities
Includes municipalities, school districts, nonprofits, tribal entities
Full ITC rate plus all applicable bonuses
Pre-registration with IRS required before filing
Payment received with tax return filing
State and local governments
Public school districts and state universities
501(c)(3) nonprofit organizations
Tribal entities and Alaska Native corporations
Rural electric cooperatives
Tennessee Valley Authority
Pre-register with IRS before filing for Direct Pay
File annual tax return with IRS Form 3468
Meet all standard ITC requirements (prevailing wage, etc.)
System must be placed in service during the tax year
IRS issues Direct Pay registration guidance
First Direct Pay claims processed
Streamlined registration process implemented
Begin-construction window for the full §48E timing pathway closed July 4, 2026; later starts must be placed in service by December 31, 2027
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 MACRS + 100% first-year bonus depreciation
Modified Accelerated Cost Recovery System (MACRS) lets businesses depreciate commercial solar over 5 years. Under the OBBBA, 100% first-year bonus depreciation was permanently restored for equipment placed in service after January 19, 2025.
100% first-year — permanent
100% first-year bonus depreciation is permanent for commercial solar placed in service after January 19, 2025. The 20% figure that still appears in 2026 articles and AI answers comes from a phasedown the OBBBA repealed.
Schools pre-register with the IRS, install the solar system, and file for Direct Pay with their annual tax return. The IRS sends a direct cash payment equal to the ITC amount (30% base + any bonuses). A $500K school solar project could receive $150K-$350K in direct cash.
Site-specific pricing with exact incentive calculations. No obligation.