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The residential solar tax credit (25D) expired December 31, 2025. But the commercial ITC (Section 48/48E) is still alive — offering 30% base + up to 70% with bonus adders. Combined with MACRS 20% bonus depreciation (2026 only) and Vermont's RES Tier II demand for distributed solar, the economics for business solar in Vermont have never been stronger.
30-70%
ITC Credit
20%
Bonus Depreciation
$0.2146
GMP Comm. Rate/kWh
3-5 yr
Typical Payback
Homeowners lost their federal tax credit. Businesses still have it. Vermont has no state solar rebate for either. Here is the comparison.
| Feature | Residential | Commercial |
|---|---|---|
| Federal Tax Credit | Section 25D — EXPIRED Dec 31, 2025 | Section 48/48E — ACTIVE until July 4, 2026 |
| Credit Rate | 0% (dead) | 30% base + up to 40% in adders |
| MACRS Depreciation | Not available | 5-year + 20% bonus (2026) |
| VT State Solar Rebate | No state rebate (never had one) | No state rebate — federal only |
| Net Metering Category | Cat I (positive adjustor) | Cat II-IV (negative adjustors) |
| CPG Process | Streamlined (<15 kW) | Full PUC process (>15 kW) |
| Sales Tax Exempt | Yes (6%) | Yes (6%) |
| Property Tax Exempt | Yes (<50 kW) | Yes (<50 kW) |
The commercial ITC starts at 30% and can reach up to 70%. Projects must begin construction before July 4, 2026.
Base ITC: 30%
Available to all qualifying commercial projects
Domestic Content Bonus: +10%
US-manufactured panels, inverters, racking. FEOC deadline July 4, 2026
Energy Community Bonus: +10%
Projects in areas with retired coal/fossil fuel employment
Low-Income Bonus: +10-20%
+10% for low-income communities, +20% for low-income residential projects
The third-party system owner (financing company) claims the ITC, NOT the installer.
Business Owns (Cash/Loan)
The business claims the 48/48E ITC on their federal tax return. They also claim MACRS depreciation. Requires sufficient tax liability.
Third-Party Owns (PPA/Lease)
The PPA provider or lessor claims the ITC. Savings pass through as lower energy rates. Best for nonprofits and tax-exempt entities.
In 2026, commercial solar gets 20% bonus depreciation in Year 1. This drops to 0% in 2027 — making 2026 the last year with a meaningful first-year tax benefit.
| Year | MACRS Rate | Deduction | Tax Savings (25%) |
|---|---|---|---|
| 1 | 20% bonus + 20% MACRS | $68,000 | $17,000 |
| 2 | 32% | $32,640 | $8,160 |
| 3 | 19.2% | $19,584 | $4,896 |
| 4 | 11.52% | $11,750 | $2,938 |
| 5 | 11.52% | $11,750 | $2,938 |
| 6 | 5.76% | $5,876 | $1,469 |
| Total | $149,600 | ~$37,401 | |
2026 vs 2027: Bonus depreciation drops from 20% to 0% in 2027. A system placed in service in 2026 gets approximately $3,500 more in Year 1 tax savings.
Commercial solar in Vermont uses the same PUC-mandated net metering system but falls into Categories II-IV, which have negative adjustors.
>15–150 kW
Adjustor
-$0.04/kWh perpetual
Effective NM Rate
$0.1439/kWh
Duration
Perpetual (life of system)
Site Requirement
Preferred site
Small commercial on preferred sites (rooftop, parking canopy, brownfield).
>150–500 kW
Adjustor
-$0.07/kWh perpetual
Effective NM Rate
$0.1139/kWh
Duration
Perpetual (life of system)
Site Requirement
Preferred site
Mid-size commercial/municipal on preferred sites.
>15–500 kW
Adjustor
-$0.08/kWh perpetual
Effective NM Rate
$0.1039/kWh
Duration
Perpetual (life of system)
Site Requirement
Non-preferred site (ground-mount on open land)
Ground-mount systems on non-preferred sites. Worst economics due to steep negative adjustor.
Commercial solar over 15 kW goes through the VT PUC Certificate of Public Good process, which includes review of environmental impact, aesthetics, and grid interconnection. Budget 2-6 months for CPG approval. Systems over 150 kW may face public review requirements. Your installer should handle the CPG application process.
All prices before incentives. Larger systems benefit from economies of scale.
15-100 kW
$1.80-$2.55/W
Example: 50 kW system
$90,000-$127,500
Before 48/48E ITC + MACRS
100-500 kW
$1.40-$1.90/W
Example: 250 kW system
$350,000-$475,000
Before 48/48E ITC + MACRS
500+ kW
$1.10-$1.50/W
Example: 1,000 kW system
$1,100,000-$1,500,000
Before 48/48E ITC + MACRS
No upfront cost, guaranteed savings, ITC passed through as lower PPA rate
Lower long-term savings, no MACRS benefit for business
Best for: Nonprofits, municipalities, cash-constrained businesses
Business owns system, claims ITC + MACRS, highest long-term savings
Requires sufficient tax liability, debt service during payback
Best for: Profitable businesses with strong tax appetite
Maximum savings, no interest, full ITC + MACRS benefit
Large capital outlay, opportunity cost of capital
Best for: Well-capitalized businesses seeking maximum ROI
Fixed monthly payment, no maintenance, ITC captured by lessor
No ownership, no MACRS, lower savings than purchase
Best for: Tax-exempt organizations, businesses wanting predictable costs
Note: Assumes 40% ITC (30% base + 10% domestic content), 25% marginal tax rate for MACRS, GMP commercial rate ($0.2146/kWh) with 2.5% annual rate escalation. Category II preferred site.
Vermont's Renewable Energy Standard (H.289) requires 20% distributed generation by 2032. Current level: 5.8%.
VT's aggressive RES targets, especially Tier II (20% distributed by 2032), create utility demand for in-state solar. However, H.289 simultaneously killed virtual NM and community solar, concentrating benefits on behind-the-meter installations.
Yes. Section 48/48E is still active 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%) stacking up to 70%. This is separate from the residential 25D credit which expired December 31, 2025. The entity that owns the system (business or third-party financing company) claims the ITC.
The entity that OWNS the system claims the ITC. If a business buys the system (cash, loan), the business claims the Section 48/48E credit. If a PPA provider or leasing company owns the panels, they claim the ITC and pass savings to the business through lower rates. The installer NEVER claims the ITC — only the system owner does.
Commercial solar in VT uses Categories II-IV based on system size and site type. Category II (15-150 kW, preferred sites): -$0.04/kWh adjustor. Category III (150-500 kW, preferred sites): -$0.07/kWh adjustor. Category IV (15-500 kW, non-preferred sites): -$0.08/kWh adjustor. All adjustors are perpetual (life of system). The base blended rate is $0.1839/kWh, so effective NM credits for commercial are lower than residential Category I.
All solar installations in Vermont require a Certificate of Public Good (CPG) from the Vermont Public Utility Commission (PUC). For commercial systems over 15 kW, the CPG process is more involved than residential and includes a review of environmental impact, aesthetics, and grid impact. Systems over 150 kW may require a more extensive public review process. Budget 2-6 months for CPG approval depending on system size and location.
MACRS allows 5-year accelerated depreciation of commercial solar systems. The depreciable basis is reduced by 50% of the ITC amount. In 2026, a 20% first-year bonus depreciation is available — this drops to 0% in 2027. For a $200,000 system with 30% ITC ($60,000), the depreciable basis is $170,000 and 20% bonus gives $34,000 in Year 1 deductions. This is a significant reason to act in 2026 rather than 2027.
No. Vermont has never had a state solar rebate for residential or commercial installations. The primary incentives for commercial solar in VT are federal: Section 48/48E ITC (30-70%) and MACRS depreciation. State-level benefits include sales tax exemption (6%), property tax exemption (under 50 kW), and net metering credits.
FEOC (Foreign Entity of Concern) rules under the IRA require that solar panels, cells, and certain components not be sourced from Chinese companies (including CATL, BYD, and others) to qualify for the full ITC. The FEOC deadline for domestic content compliance is July 4, 2026. Projects using non-compliant components may lose eligibility for bonus adders. Verify your equipment sourcing with your installer.
Vermont's Renewable Energy Standard (H.289) requires 20% distributed generation by 2032. Current level: 5.8%. This creates utility demand for in-state solar installations, which can improve interconnection support and potentially create utility procurement opportunities for commercial-scale distributed solar projects.
Complete pricing breakdown for residential and commercial solar in Vermont.
Read moreFull breakdown of Category I-IV net metering, adjustors, and CPG process.
Read moreWhich VT utility is best for solar? Rates, TOU, battery, and payback compared.
Read moreThe 48/48E ITC deadline is July 4, 2026. Commercial projects take 3-9 months from assessment to operation. Start now to capture the 30-70% tax credit and 20% bonus depreciation. Vermont's RES Tier II target makes this the right time for business solar.
Free assessment. No obligation. We help VT businesses navigate 48/48E, MACRS, CPG, and net metering.