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Modified Accelerated Cost Recovery System (MACRS) allows businesses to depreciate commercial solar equipment over 5 years, with 20% bonus depreciation in 2026.
For a $1M commercial solar system with 30% ITC ($300K), the depreciable basis is $850K. With 20% bonus depreciation ($170K) and standard 5-year MACRS on the remaining $680K, the total tax savings at a 35% rate is approximately $297,500 in present value.
5-year accelerated depreciation schedule (vs. 25-year useful life)
20% bonus depreciation in 2026 (down from 40% in 2025)
Depreciable basis reduced by 50% of ITC claimed
Bonus depreciation drops to 0% in 2027
At 35% tax rate, MACRS can reduce net cost by additional 15-20%
Only available to taxable entities (not tax-exempt)
Taxable businesses and entities
Commercial solar equipment placed in service during the tax year
System must be new (not used equipment)
Taxpayer must have sufficient tax liability to utilize deductions
Use IRS Form 4562 (Depreciation and Amortization)
Elect bonus depreciation in the first year or lose it
Keep records of equipment cost basis and ITC adjustment
60% bonus depreciation available
40% bonus depreciation
20% bonus depreciation (current year)
0% bonus depreciation - standard 5-year MACRS only
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.
+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.
For a $1M commercial solar system with 30% ITC ($300K), the depreciable basis is $850K. With 20% bonus depreciation ($170K) and standard 5-year MACRS on the remaining $680K, the total tax savings at a 35% rate is approximately $297,500 in present value.
Site-specific pricing with exact incentive calculations. No obligation.