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Get a Free Quote5-year accelerated depreciation + 100% first-year bonus + Section 48 ITC stacking. Connecticut has the highest electric rates in the continental U.S. — MACRS makes commercial solar payback even faster.
MACRS Schedule
5 Years
vs. 25+ year panel life
Bonus Depreciation
100%
Full first-year deduction
CT Electric Rate
$0.33+
Eversource / UI avg
ITC Stacking
30-70%
Section 48/48E credit
The Modified Accelerated Cost Recovery System (MACRS) is the federal depreciation method that lets a business recover a capital asset's cost through annual income-tax deductions. Commercial solar is 5-year property: the IRS lets you write the system off over five tax years even though the panels run 25-30+ years, and the permanent 100% first-year bonus (below) can pull the entire basis into Year 1. It is a deduction that lowers taxable income — not a dollar-for-dollar credit like the ITC. The federal mechanics are identical in every state; for the full treatment see our national MACRS depreciation guide.
What makes the depreciation so valuable in Connecticut specifically is the rate environment: CT carries among the highest commercial electricity rates in the entire United States. Eversource CT averages roughly $0.33/kWh and United Illuminating roughly $0.28/kWh, with the statewide commercial blend near $0.221/kWh. Installed commercial pricing runs about $2.10-$2.55/W small (25-100 kW), $1.60-$1.90/W mid-size, and $1.20-$1.50/W large-scale. Pair that avoided-energy cost with accelerated depreciation and payback on a larger CT system commonly lands in the 3-5 year range.
In Connecticut, federal MACRS + bonus depreciation is the front-loaded tax layer of a stack administered largely under the Energize CT umbrella (the joint utility/state efficiency-and-clean-energy brand) and the CT Green Bank:
Depreciation accelerates the tax recovery; NRES (or a legacy ZREC contract) plus virtual net metering supply the multi-year revenue. Model them together for an accurate CT pro-forma — program availability and pricing change with each procurement round.
On top of the 5-year schedule, commercial solar placed in service after January 19, 2025 qualifies for 100% first-year bonus depreciation under OBBBA (IRC §168(k)) — the entire adjusted basis deductible in Year 1, with the rate permanent and no scheduled phasedown. This is federal law, identical nationwide. The Connecticut advantage is on the state side: as the CT-specific section shows, Connecticut generally conforms to the federal bonus for corporation-business-tax purposes, so (unlike Massachusetts) there is no Year-1 add-back to manage.
2023
80%
Expired
2024
60%
Expired
Early 2025
40%
Expired
OBBBA
100%
Current
2026
100%
Current
2027+
100%
Current
The Tax Cuts and Jobs Act (TCJA) had scheduled a phase-down toward 0% by 2027 (80% in 2023, 60% in 2024, 40% in early 2025). OBBBA reversed that: under IRC §168(k), 100% first-year bonus depreciation is permanently restored for property placed in service after January 19, 2025, with no scheduled phasedown. A system placed in service today can deduct the entire depreciable basis in Year 1. For a $405,000 CT system with a 30% ITC, that is a $344,250 Year 1 deduction.
The MACRS 5-year property class uses the 200% declining balance method switching to straight-line in the later years. With 100% first-year bonus depreciation, Year 1 captures the full depreciable basis.
| Year | Standard MACRS | With 100% Bonus | On $344K Basis* |
|---|---|---|---|
| Year 1 | 20.00% | 100.00% | $344,250 |
| Year 2 | 32.00% | 0.00% | $0 |
| Year 3 | 19.20% | 0.00% | $0 |
| Year 4 | 11.52% | 0.00% | $0 |
| Year 5 | 11.52% | 0.00% | $0 |
| Year 6 | 5.76% | 0.00% | $0 |
| Total | 100% | 100% | $344,250 |
* Example: $405,000 system (150 kW at $2.70/W) with 30% ITC. Depreciable basis = $405,000 - ($121,500 x 50%) = $344,250
The ITC-plus-MACRS interaction is federal and works the same in every state, so we keep this tight: an owner claims both the Section 48/48E ITC and 5-year MACRS, and the only coupling is that the depreciable basis is reduced by half the credit claimed. Because Connecticut conforms to the federal bonus, a CT C-corp captures the Year-1 acceleration on both its federal and CT corporation-business-tax returns — a cleaner outcome than the MA add-back. The four steps below use a $405,000 CT system; for deeper detail see the Section 48/48E ITC guide.
The ITC is a dollar-for-dollar federal tax credit. The base rate is 30% for projects meeting prevailing wage + apprenticeship requirements. Bonus adders can push this to 40%, 50%, or up to 70%.
$405,000 system x 30% = $121,500 ITC (tax credit, not deduction)
Reduce the total system cost by 50% of the ITC claimed. This prevents "double-dipping" — you still depreciate most of the cost, but not the full ITC-covered portion.
$405,000 - ($121,500 x 50%) = $405,000 - $60,750 = $344,250 depreciable basis
Apply the 100% first-year bonus to the adjusted basis. The entire depreciable basis is deducted in Year 1, leaving a $0 remaining balance for the standard schedule.
Bonus: $344,250 x 100% = $344,250. Regular MACRS: $0 x 20% = $0. Year 1 total: $344,250
Combine the ITC (dollar-for-dollar credit) with the depreciation deduction (multiplied by your marginal tax rate). For a CT C-corp, the federal rate is 21% + CT 6.99% = 27.99%.
$121,500 ITC + ($344,250 x 27.99%) = $121,500 + $96,356 = $217,856 Year 1 federal+state tax benefit
| ITC Rate | Basis Reduction | Depreciable % of Cost | On $405K System |
|---|---|---|---|
| 30% | 15% | 85% | $344,250 |
| 40% | 20% | 80% | $324,000 |
| 50% | 25% | 75% | $303,750 |
| 60% | 30% | 70% | $283,500 |
| 70% | 35% | 65% | $263,250 |
Formula: Depreciable Basis = System Cost - (ITC Amount x 50%). Higher ITC = lower depreciable basis, but the ITC credit itself more than compensates.
Connecticut's tax treatment is friendlier to bonus depreciation than Massachusetts's but more variable on property tax than New Hampshire's. The two facts that matter most for modeling: CT generally conforms to the federal bonus for the corporation business tax (no Year-1 add-back), and CT has no statewide property-tax exemption for commercial solar — property treatment is negotiated municipally through PILOT agreements. Here are the CT-specific levers.
Unlike Massachusetts, Connecticut generally conforms to federal bonus depreciation for corporation business tax purposes. This means:
Confirm with your CPA, as CT conformity can change with legislative updates.
Solar equipment is exempt from the 6.35% Connecticut sales tax. This is an at-purchase savings — no application required.
On a $405,000 system: $25,713 instant savings
Does NOT reduce MACRS depreciable basis
Connecticut does not have a blanket statewide property tax exemption for solar. Instead, municipalities can offer PILOT (Payment in Lieu of Taxes) agreements for commercial solar installations.
PILOT terms vary by town — typically 0-2% of assessed value, negotiated on a case-by-case basis
Some towns offer 100% exemption. Check with your municipality before committing.
Instead of (or in combination with) MACRS + bonus depreciation, CT businesses can elect Section 179 expensing to deduct up to $1,220,000 (2026 limit) of the solar system cost in Year 1. Section 179 may be advantageous for smaller systems where the full cost falls under the limit. Unlike bonus depreciation, Section 179 requires the business to have sufficient taxable income in the deduction year. Your CPA can model which election produces the better outcome.
Connecticut's commercial revenue programs are administered under Energize CT and the CT Green Bank. The current standard offer is the Non-Residential Renewable Energy Solutions (NRES) tariff, which replaced the older ZREC/LREC auction model for new projects. These layer on top of virtual net metering and the federal MACRS/ITC benefits:
NRES (current)
The Non-Residential Renewable Energy Solutions tariff — long-term contracts for new commercial systems via periodic procurement, replacing ZREC auctions.
Legacy ZREC/LREC
Zero/Low-Emission REC contracts (15-year) for projects awarded under the prior auction program — still paying out on existing systems.
ESS storage incentive
Energy Storage Solutions pays upfront and performance incentives for paired commercial battery storage — a revenue layer for solar-plus-storage.
Program names, tariffs, and procurement schedules evolve — confirm the active CT program and current pricing for your interconnection before modeling revenue.
The Section 48/48E commercial ITC starts at a 30% base rate and can stack up to 70% with bonus adders. Each adder has specific eligibility requirements. Projects that begin construction on or before July 4, 2026 lock in the longer placed-in-service pathway; projects that begin construction later can still qualify but generally must be placed in service by December 31, 2027.
Base ITC: 30%
Prevailing wage + apprenticeship (projects > 1 MW)
Domestic Content (FEOC): +10%
US-manufactured steel, iron, and components. Deadline: July 4, 2026
Energy Community: +10%
Brownfield, closed coal mine/plant, or fossil fuel employment area (check ZIP)
Low-Income: +10-20%
Located in low-income community or serving low-income beneficiaries
Maximum possible ITC: 30% + 10% + 10% + 20% = 70%. On a $405,000 system, that is $283,500 in tax credits.
The residential solar tax credit (Section 25D) expired December 31, 2025. Homeowners who buy solar with cash or a loan receive $0 from the federal government. The Section 48/48E commercial ITC is a separate program that remains available for commercial projects (including third-party-owned residential systems under PPA/lease structures). Beginning construction on or before July 4, 2026 locks in the longer placed-in-service pathway; projects that begin construction later can still qualify but generally must be placed in service by December 31, 2027. The system owner — not the installer — claims the ITC.
MACRS only delivers value if the owner has taxable income to offset. Connecticut adds a favorable wrinkle: because CT conforms to the federal bonus, a profitable C-corp realizes the accelerated Year-1 deduction on both its federal and 6.99% CT corporation-business-tax returns simultaneously — no deferral, no add-back. How each structure fares:
Maximum benefit. C-corps deduct MACRS directly against corporate income. The 21% federal rate + 6.99% CT rate = up to 27.99% marginal tax savings on depreciable amount.
MACRS deductions pass through to shareholders on Schedule K-1. Each shareholder deducts their pro-rata share against personal income. CT personal rate ranges from 3% to 6.99%.
Similar to S-corps. Depreciation allocations flow through to members per the operating agreement. Tax equity partnerships can optimize allocation.
MACRS deductions flow to Schedule C. Effective if the owner has significant business income. Limited by passive activity rules if solar is a separate activity.
Cannot use MACRS directly (no taxable income). Instead, use PPA/lease structures where the for-profit system owner claims MACRS + ITC and passes savings through lower rates.
Let us walk through a real-world example of a 150 kW commercial solar system on a mid-size business rooftop in Hartford, Connecticut. This shows how MACRS, ITC, and CT-specific benefits stack together.
System Size
150 kW
Cost per Watt
$2.70/W
Gross Cost
$405,000
Entity Type
C-Corp
Section 48 ITC (30%)
$405,000 x 30% = dollar-for-dollar tax credit
$121,500
Depreciable Basis
$405,000 - ($121,500 x 50%) = adjusted basis
$344,250
Year 1 Bonus Depreciation (100%)
$344,250 x 100% = bonus deduction
$344,250
Regular Year 1 MACRS (on $0 remainder)
($344,250 - $344,250) x 20%
$0
Total Year 1 Depreciation Deduction
$344,250 + $0
$344,250
Year 1 Depreciation Tax Savings
$344,250 x 27.99% (21% fed + 6.99% CT)
$96,356
Total Year 1 Tax Benefit
$121,500 ITC + $96,356 depreciation savings
$217,856
Sales Tax Savings
$25,713
6.35% exemption at purchase
Property Tax (PILOT)
Varies by town
Negotiate with municipality — some offer 100% exemption
Annual Electricity Savings
~$49,500/yr
180,000 kWh x ~$0.275/kWh avg commercial rate
NRES / Legacy ZREC Revenue (Est.)
~$9,000/yr
NRES tariff for new systems (legacy ZREC for prior awards) — varies by procurement round
Because CT conforms to the federal bonus, the full depreciation benefit (federal + 6.99% CT) is captured in Year 1 — no state add-back to defer. Annual electricity savings ($49,500/yr) plus NRES or legacy ZREC revenue ($9,000/yr) further reduce effective cost. Typical payback: 3-5 years for a profitable CT C-corp.
Common questions from CFOs, business owners, and tax advisors about MACRS solar depreciation in Connecticut.
MACRS (Modified Accelerated Cost Recovery System) allows Connecticut businesses to depreciate commercial solar systems over 5 years for federal tax purposes, even though solar panels last 25+ years. This front-loads tax deductions, creating significant cash flow benefits in the early years of ownership. Under OBBBA (IRC §168(k)), 100% first-year bonus depreciation is permanently restored for property placed in service after January 19, 2025, so the entire depreciable basis can be deducted in Year 1. The depreciable basis is reduced by 50% of any ITC claimed.
Under OBBBA (IRC §168(k)), businesses can claim 100% first-year bonus depreciation on the adjusted depreciable basis of a solar system, deducting the entire basis in Year 1. For example, on a $405,000 system (150 kW at $2.70/W) with 30% ITC ($121,500), the depreciable basis is $344,250, and the full $344,250 is deducted in Year 1. This 100% bonus is permanent for property placed in service after January 19, 2025 -- there is no scheduled phasedown.
Yes. Businesses that own their commercial solar system can claim both the Section 48/48E ITC (30% base, up to 70% with adders) AND 5-year MACRS depreciation. The only interaction is that the depreciable basis must be reduced by 50% of the ITC claimed. For a 30% ITC, the depreciable basis becomes 85% of the system cost. For a 50% ITC, the depreciable basis becomes 75%. Both benefits require system ownership -- PPA and lease structures transfer these benefits to the third-party owner.
Connecticut generally conforms to federal MACRS depreciation, including bonus depreciation, for corporation business tax purposes. Unlike Massachusetts, CT does not require an add-back of federal bonus depreciation on the state return. This means CT businesses receive the full benefit of bonus depreciation on both their federal AND state returns in Year 1. Consult your CPA to confirm current conformity, as state tax law can change.
When combining MACRS with the Section 48 ITC, the depreciable basis is reduced by 50% of the ITC claimed. The formula is: Depreciable Basis = Total System Cost - (ITC Amount x 50%). For example, a $405,000 system with a 30% ITC ($121,500) has a depreciable basis of $405,000 - $60,750 = $344,250. With a 50% ITC ($202,500), the depreciable basis would be $405,000 - $101,250 = $303,750.
C-corporations with high taxable income benefit most, since they can directly deduct MACRS against corporate income at the 21% federal rate plus 6.99% CT corporation business tax rate. S-corporations and multi-member LLCs also benefit, as depreciation deductions pass through to owners/shareholders via K-1s. Nonprofits and public entities cannot use MACRS directly but benefit indirectly through PPA/lease structures where the for-profit system owner claims MACRS and passes savings through lower rates.
Yes. OBBBA permanently restored 100% first-year bonus depreciation for commercial solar (IRC §168(k)) for property placed in service after January 19, 2025 -- reversing the earlier TCJA phasedown (80% in 2023, 60% in 2024, 40% in early 2025). There is no scheduled drop to 0%. Projects placed in service in 2026, 2027, or later can deduct the entire depreciable basis in Year 1.
Connecticut offers several benefits that stack with MACRS: (1) Sales tax exemption -- solar equipment is exempt from the 6.35% CT sales tax, saving over $25,000 on a $405,000 system. (2) Property tax -- Connecticut has no blanket statewide exemption, but many municipalities negotiate PILOT (Payment in Lieu of Taxes) agreements for commercial solar, with terms varying by town. (3) Revenue programs under Energize CT -- the current Non-Residential Renewable Energy Solutions (NRES) tariff for new systems (which replaced the ZREC/LREC auctions), legacy ZREC/LREC contracts on prior awards, and the Energy Storage Solutions (ESS) incentive for paired batteries. The sales-tax exemption applies automatically; PILOT and program revenue require application. None of these reduce the MACRS depreciable basis.
Full commercial solar guide for Connecticut: ZREC/LREC programs, ITC stacking, financing, and ROI for CT businesses.
National MACRS guide: 5-year schedule, 100% first-year bonus depreciation, and depreciable basis calculations.
Up to $1,220,000 in Year 1 deductions. How Section 179 compares to MACRS for commercial solar installations.
Connecticut residential and commercial solar pricing, utility rates, and incentive stacking for 2026.
Get a personalized MACRS + ITC tax savings analysis for your Connecticut business. Our team will model the exact Year 1 benefit based on your system size, entity type, and tax situation.
Begin construction on or before July 4, 2026 to lock in the longer Section 48 ITC pathway (projects beginning later can still qualify but generally must be placed in service by December 31, 2027). 100% first-year bonus depreciation is permanent under OBBBA.