Commercial solar projects aiming to claim the federal solar tax credit just entered a new phase. Projects beginning construction now must be placed in service by December 31, 2027 to qualify for the ITC incentive. Battery storage is on a separate, longer timeline…
SUMMER 2026 Guide to Commercial Solar Tax Incentives: Federal ITC & MACRS
Depreciation in Texas
Depreciation in Texas
Maximize capital ROI by leveraging federal tax credits, accelerated depreciation, and Texas utility incentives for commercial & industrial solar energy.
Understanding the Section 48E Commercial Investment Tax Credit
The federal solar ITC for commercial projects is governed by Section 48E of the Internal Revenue Code — the technology-neutral Clean Electricity Investment Credit that replaced the older Section 48 for projects beginning construction after 2024. (“Section 48” is still used informally across the industry; Section 48E is the current citation.)
Commercial systems under 1 MW (AC) -which covers most rooftop and ground-mount C&I installations- generally qualify for the full 30% base rate without prevailing wage and apprenticeship requirements. Systems 1 MW or larger must meet those requirements to receive the 30% rate; otherwise the base credit drops to 6%.
Beyond the base rate, qualifying projects may stack additional adders: a domestic content bonus, an energy community bonus, and a low-income community bonus, each independently determined.
Illustrative example — $500,000 system
| Gross system cost | $500,000 |
| Federal ITC (30%) | –$150,000 |
| Depreciable basis after ITC reduction | $425,000 |
| Potential year 1 depreciation benefit (21% rate) | –$89,250 |
| Potential utility rebate (where available) | –$40,000 |
| Illustrative net cost | ~$220,750 |
*For illustration only. Actual results vary by project size, tax situation, and program availability. Consult your tax advisor.
100% First-Year Bonus Depreciation Has Replaced the Old 5-Year Schedule
Commercial solar property used to depreciate under a 5-year MACRS schedule spread across six tax years. That schedule no longer applies to new projects. Current federal law made 100% bonus depreciation permanent for qualifying property placed in service after January 19, 2025, and eliminated the old 5-year MACRS designation for new energy property beginning construction after December 31, 2024. In practice, qualifying systems can now be fully depreciated in year one.
The basis-reduction step still applies: depreciable basis equals total project cost minus half the ITC credit claimed.
Depreciable Basis = Total Project Cost − (ITC Credit ÷ 2) Example: $500,000 − $75,000 = $425,000 depreciable basis, potentially fully deductible in year one.
Layering Local Texas Incentives
Some Texas utilities, including Austin Energy, offer additional commercial incentives -often a performance-based incentive paying a per-kWh rate for solar generation, and/or a capacity-based incentive offering upfront rebates for qualifying solar and battery storage installations. Program terms and funding change periodically; current rates should be confirmed directly with the utility.
Austin Energy Commercial “Standard Offer”
- Lease your roof or land — host solar with no upfront cost
- Earn ongoing lease income, no utility bill impact
- Sell your power directly to Austin Energy
- Qualifying systems may lock in a payment floor up to $0.11/kWh for 10 years
- Open to 50 kW–10 MW commercial systems, with contractor support through approval
Frequently Asked Questions
Does the 2026 deadline affect a project we’re planning now? Possibly. Projects beginning construction after July 4, 2026 must be placed in service by December 31, 2027 to claim the federal credit. Projects that began construction on or before that date are on a longer, separate timeline. Talk to our team about where your project stands.
Does this deadline apply to battery storage too? No. Battery energy storage is on a separate, longer phase-out schedule and isn’t affected by this particular deadline.
How does bonus depreciation work now? Qualifying solar property can generally be fully depreciated in the year it’s placed in service, rather than spread across the older 6-year schedule — subject to the standard basis-reduction rule tied to the ITC.
Do sourcing rules affect our equipment choices? Recent federal rules tie certain bonus eligibility to where equipment and materials are sourced from. NATiVE Solar sources from compliant manufacturers, including several with U.S. manufacturing operations, to help keep projects positioned for eligibility.
What incentives are available at the state or utility level in Texas? Some Texas utilities offer additional rebates, and Texas law generally exempts added solar value from increasing a commercial property’s assessed value. Availability varies by utility and program funding.
