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While the residential solar ITC is dead, the commercial ITC under Section 48/48E remains available for projects beginning construction before July 4, 2026. PA businesses can stack the 30% base ITC with bonus adders, MACRS depreciation, and SREC income.
30-70%
ITC with Adders
20%
Bonus Depreciation
$22-35
SREC/MWh
Jul 4
FEOC Deadline
Projects must begin construction before July 4, 2026 to qualify for the full Section 48/48E ITC without Foreign Entity of Concern (FEOC) restrictions. After this date, projects using components from certain foreign entities will face reduced or zero ITC. PA businesses should act now to lock in the full credit.
Section 48/48E provides a 30% base ITC with bonus adders that can bring the total to 50-70% of project cost.
Maximum potential: 70% ITC (30% base + 10% domestic + 10% energy community + 20% low-income)
Available for all qualifying commercial solar projects
US-manufactured components (steel, cells, inverters)
Projects in brownfields, coal regions, or high-unemployment areas. Many PA counties qualify.
Projects serving low-income communities (+10%) or part of qualified low-income housing (+20%)
PA-specific note: Many PA counties qualify for the Energy Community bonus due to the state's coal mining history. Check IRS mapping tools for your project location. Combined with domestic content, a PA commercial project could reach 50% ITC before low-income adders.
Commercial solar pricing in PA decreases with system size. All prices are before ITC and include 6% PA sales tax.
| Tier | System Size | $/Watt Range | Example Size | Example Cost |
|---|---|---|---|---|
| Small Business | 25-100 kW | $1.80 - $2.55 | 50 kW | $90,000-$127,500 |
| Mid-Size Commercial | 100-500 kW | $1.40 - $1.90 | 250 kW | $350,000-$475,000 |
| Large-Scale | 500 kW - 3 MW | $1.10 - $1.50 | 1,000 kW | $1,100,000-$1,500,000 |
Commercial solar qualifies for 5-year MACRS accelerated depreciation. In 2026, there is an additional 20% first-year bonus. Note: the bonus drops to 0% in 2027.
| Year | Standard MACRS | With 2026 Bonus (20%) | Notes |
|---|---|---|---|
| Year 1 | 20.00% | 36.00% | 20% bonus on total + 20% standard on remainder |
| Year 2 | 32.00% | 25.60% | |
| Year 3 | 19.20% | 15.36% | |
| Year 4 | 11.52% | 9.22% | |
| Year 5 | 11.52% | 9.22% | |
| Year 6 | 5.76% | 4.60% | Half-year convention |
Important: The depreciable basis is reduced by 50% of the ITC claimed. For a $1M system with 30% ITC ($300K), the MACRS basis is $1M - $150K = $850K. At a 21% corporate tax rate, this provides approximately $178,500 in total tax savings over 6 years.
Projections assume eastern PA location (1,250 kWh/kW/yr), PECO rate ($0.21/kWh), and SREC value of $28/SREC.
| Metric | 50 kW | 250 kW | 1,000 kW |
|---|---|---|---|
| Total Cost (pre-ITC) | $108,000 | $412,000 | $1,300,000 |
| ITC at 30% | $32,400 | $123,600 | $390,000 |
| ITC at 50% | $54,000 | $206,000 | $650,000 |
| MACRS Tax Savings | $16,200 | $61,800 | $195,000 |
| SREC Income (15 yr) | $23,100 | $115,500 | $462,000 |
| Net Metering (25 yr) | $165,000 | $825,000 | $3,300,000 |
| Payback (30% ITC) | 5.2 years | 4.8 years | 4.2 years |
| Payback (50% ITC) | 3.8 years | 3.4 years | 2.9 years |
PA SRECs are currently weak ($22-35) due to the 0.5% solar carve-out. Pending PRESS legislation could transform this market.
PA allows commercial net metering for systems up to 3 MW. The same 1:1 retail credit and PTC true-up rules apply.
3 MW
Maximum commercial system size for net metering
1:1
Full retail credit for monthly excess generation
PTC
Annual true-up at supply-only rate (lower)
Sizing tip: For commercial accounts, size the system to offset 80-90% of annual consumption. This minimizes the excess settled at the lower PTC rate. Commercial accounts often have higher daytime demand that aligns well with solar production, reducing excess.
Yes. Section 48/48E commercial ITC is still available for 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 (+10-20%) that can bring the total to 50-70%. This is separate from the residential Section 25D ITC, which expired December 31, 2025.
The entity that owns the solar system claims the ITC. For commercial properties, this is typically the business owner or a third-party financing company (in the case of a PPA or lease). The ITC is NOT claimed by the installer. If a third-party company owns the system via PPA, they claim the credit and pass savings to the host as a lower electricity rate.
FEOC (Foreign Entity of Concern) rules require that after July 4, 2026, solar components cannot contain materials from certain foreign entities to qualify for the full ITC. Projects beginning construction before this date are exempt. This creates urgency for PA commercial projects to break ground before the deadline.
Commercial solar systems in PA generate SRECs (Solar Renewable Energy Credits) registered through PJM-GATS. At current prices of $22-35/SREC (1 SREC = 1 MWh), a 250 kW commercial system producing ~285 MWh/year would earn approximately $7,700/year in SREC income. SRECs have a 3-year useful life.
MACRS (Modified Accelerated Cost Recovery System) allows businesses to depreciate solar assets over 5 years. In 2026, there is a 20% first-year bonus depreciation. For a $1.3M system with 30% ITC, the depreciable basis is $1.3M minus 50% of the ITC = $1.105M. At a 21% corporate tax rate, this provides approximately $195,000-232,000 in tax savings over 5-6 years.
PA allows net metering for commercial systems up to 3 MW. Like residential, commercial systems receive 1:1 full retail credits monthly, with an annual true-up at the PTC (Price-to-Compare) rate. Large commercial users should size systems to minimize annual excess to avoid the lower PTC settlement.
Yes. PA charges 6% sales tax on commercial solar equipment and installation. There is no exemption. For a $412,000 mid-size system, this adds approximately $24,700 to the project cost. However, the sales tax is included in the ITC-eligible cost basis, so you recover 30-70% of it through the ITC.
The PRESS (PA Renewable Energy Standard Strengthening) Act would raise the solar carve-out from 0.5% to 5.5%, dramatically increasing demand for PA SRECs and likely boosting prices from the current $22-35 range to $100+ range (similar to NJ and MA). This would significantly improve commercial solar ROI. The legislation is currently pending in the PA legislature.
We help PA businesses maximize the Section 48 ITC, MACRS depreciation, and SREC income. Time is limited before the July 4, 2026 FEOC deadline.