Commercial Solar in New Jersey 2026: Section 48 ITC, MACRS & SuSI Guide

Yes. The Section 48/48E commercial Investment Tax Credit (ITC) is still available for commercial solar projects that begin construction before July 4, 2026. The base rate is 30%, with bonus adders for domestic content (+10%), energy community (+10%), and low-income projects (+10-20%) that can stack up to 70%. This is different from the residential 25D credit which expired December 31, 2025. For a commercial project, the third-party system owner (developer or financing company) claims the ITC, not the business occupying the building.

The entity that OWNS the solar system claims the Section 48/48E ITC. If a business buys the system outright with cash or a loan, they claim the ITC on their federal tax return. If the project uses a PPA or lease structure, the third-party developer/financing company that owns the panels claims the ITC and passes the savings to the business through lower PPA rates or lease payments. The installer does NOT claim the ITC -- only the system owner does. Nonprofits and tax-exempt entities can benefit through PPA/lease structures where the for-profit system owner claims the credit.

The Successor Solar Incentive (SuSI) Administratively Determined Incentive (ADI) is New Jersey's production-based incentive for solar projects up to 5 MW. Non-residential projects receive approximately $100-110/MWh for 15 years, with public entities (schools, municipalities, government buildings) receiving an additional +$20/MWh bonus. This is paid on actual production, not capacity, making it a reliable revenue stream that significantly improves project economics. ADI payments stack on top of the federal ITC and MACRS depreciation.

The Modified Accelerated Cost Recovery System (MACRS) allows businesses to depreciate commercial solar systems over 5 years for tax purposes, even though the panels last 25+ years. In 2026, there is an additional 20% first-year bonus depreciation. This means a significant portion of the system cost can be deducted in Year 1, with the remainder spread over the following 4 years. However, the ITC reduces the depreciable basis by half (e.g., with a 30% ITC, the depreciable basis is 85% of total cost). Bonus depreciation drops to 0% in 2027, making 2026 projects more advantageous.

Commercial solar costs in New Jersey range from $1.15/W to $2.40/W depending on system size. Small business systems (25-100 kW) cost $1.95-$2.40/W, mid-size commercial (100-500 kW) costs $1.50-$1.85/W, and large-scale projects (500+ kW) cost $1.15-$1.45/W. A typical 100 kW small commercial rooftop system costs $195,000-$240,000 before incentives. After the 30% ITC, MACRS depreciation, and SuSI ADI revenue, the effective cost is substantially lower.

The Foreign Entity of Concern (FEOC) deadline is July 4, 2026. After this date, solar projects using components manufactured by foreign entities of concern (primarily certain Chinese companies) may lose eligibility for the domestic content bonus (+10% ITC adder). To qualify for the full domestic content bonus, projects need to verify their supply chain meets domestic content requirements. This is especially relevant for the 10% domestic content ITC bonus adder. Projects should begin supply chain verification now to ensure compliance before the deadline.

Yes, though indirectly. Nonprofits, schools, municipalities, and other tax-exempt entities cannot claim the ITC directly since they have no federal tax liability. Instead, they use PPA or lease structures where a for-profit third-party developer owns the system and claims the ITC. The savings are passed to the nonprofit through lower PPA rates. Additionally, the Inflation Reduction Act introduced "direct pay" (elective payment) for certain tax-exempt entities, allowing them to receive the ITC as a direct payment. NJ public entities also receive the +$20/MWh SuSI ADI bonus.

The Competitive Solar Incentive (CSI) is the SuSI program tier for large solar projects exceeding 5 MW. Unlike the ADI which has a fixed rate, CSI uses a competitive auction process where developers bid for incentive levels. This typically results in lower $/MWh rates than ADI but is designed for utility-scale and large commercial/industrial projects. CSI projects are awarded through periodic solicitation rounds conducted by the NJ Board of Public Utilities. The 15-year incentive term applies to CSI as well.

New Jersey offers net metering for commercial solar systems up to 5 MW. Excess electricity exported to the grid receives a 1:1 credit at the retail rate on your utility bill. Credits roll over monthly and are trued up annually. This means a commercial system that generates more than the business uses during sunny periods banks credits for use during evenings and high-demand periods. NJ net metering applies to all major utilities (PSE&G, JCP&L, ACE). Combined with SuSI ADI revenue, net metering significantly improves commercial solar economics.

New Jersey offers two significant tax exemptions for solar: (1) Sales tax exemption -- solar equipment is exempt from the 6.625% NJ sales tax, saving thousands on a commercial installation, and (2) Property tax exemption -- solar systems are 100% exempt from property tax increases. This means a $500,000 commercial solar system adds $0 to your property tax bill. In New Jersey, where property taxes average $9,500/year, this exemption is extremely valuable. These exemptions apply to both residential and commercial solar installations.

A typical NJ commercial solar project takes 6-12 months from initial assessment to operation. The timeline includes: site assessment and engineering (2-4 weeks), financing/contracting (4-8 weeks), permitting and utility interconnection application (4-8 weeks), equipment procurement (4-12 weeks depending on availability), installation (2-6 weeks depending on size), inspection and interconnection (2-4 weeks), and SuSI ADI registration. To capture the 20% MACRS bonus depreciation and begin construction before the July 4, 2026 FEOC deadline, businesses should start the process by early 2026.

When combining MACRS with the ITC, the depreciable basis is reduced by half the ITC amount. For example, with a $1,000,000 system and 30% ITC ($300,000 credit), the depreciable basis is $1,000,000 - ($300,000 x 50%) = $850,000. In 2026, the 20% first-year bonus depreciation means $170,000 (20% of $850,000) can be deducted in Year 1, with the remaining $680,000 depreciated over 4 years using the MACRS 5-year schedule. In 2027, bonus depreciation drops to 0%, so the entire amount follows the standard 5-year schedule. This makes 2026 particularly advantageous for commercial solar projects.