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Section 179 allows businesses to deduct the full cost of qualifying commercial solar equipment in the year it is placed in service, rather than depreciating it over multiple years.
Section 179 lets businesses deduct the full purchase price of qualifying solar equipment in the first year instead of depreciating it over 5+ years. For 2026, businesses can deduct up to $1,220,000 of solar equipment costs. This provides an immediate tax benefit rather than spreading deductions over the MACRS depreciation schedule.
Immediate full deduction of qualifying equipment cost in year one
2026 deduction limit: $1,220,000 (indexed for inflation annually)
Phase-out begins when total equipment purchases exceed $3,050,000
Applies to solar panels, inverters, racking, battery storage, and EV chargers
Can be combined with Section 48/48E ITC (depreciable basis reduced by 50% of ITC)
Remaining cost beyond Section 179 limit can use MACRS + bonus depreciation
Only available to taxable businesses with sufficient income to offset
Taxable businesses (C-corps, S-corps, LLCs, sole proprietors)
Equipment must be purchased (not leased) and placed in service during the tax year
Must be used more than 50% for business purposes
Total equipment purchases must be below the phase-out ceiling ($3,050,000 in 2026)
Not available to tax-exempt entities (use Direct Pay instead)
File IRS Form 4562 (Depreciation and Amortization) with tax return
Elect Section 179 in the year the equipment is placed in service
Maintain records of equipment cost, installation date, and business use percentage
If ITC is also claimed, reduce depreciable basis by 50% of ITC before applying Section 179
Cannot create or increase a net operating loss (deduction limited to taxable income)
Section 179 limit: $1,160,000 / phase-out: $2,890,000
Section 179 limit: $1,250,000 / phase-out: $3,130,000
Section 179 limit: $1,220,000 / phase-out: $3,050,000 (current year)
CRITICAL: Begin construction before July 4 for Section 48 ITC eligibility
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.
Section 179 lets businesses deduct the full purchase price of qualifying solar equipment in the first year instead of depreciating it over 5+ years. For 2026, businesses can deduct up to $1,220,000 of solar equipment costs. This provides an immediate tax benefit rather than spreading deductions over the MACRS depreciation schedule.
Site-specific pricing with exact incentive calculations. No obligation.