The 48E credit, the 2027 deadline and depreciation, explained
What the credit is worth, the exact rule that ends it, and the two tax points most solar proposals leave out.
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The credit, and why the real deadline is sooner than December
Section 48E of the tax code gives a business a federal tax credit worth 30% of a solar system’s cost. The 2025 budget law ended that credit for solar: unless a project had started construction by July 4, 2026, the system must be placed in service, meaning running with utility permission to operate, by December 31, 2027. After that date the credit for solar is zero. There is no step-down and no extension to wait for.
A commercial system is not a quick install. Design, structural review, permits, equipment lead times and the utility’s interconnection queue all run in sequence. On our projects that chain has typically taken about nine months from signed contract to completion, and longer for larger systems. That is why we tell clients the practical deadline is a signed contract by the end of March 2027, and earlier for larger systems.
Two things most competitors leave out. First, the same law restored 100% bonus depreciation for equipment acquired after January 19, 2025, so a taxable business can deduct most of the system’s cost (85% of it, since the depreciable basis is reduced by half the credit) in the year it goes into service. For many owners that is worth more than the credit itself. Second, battery storage is not subject to the 2027 cutoff: a battery keeps its own 30% credit after the solar credit ends.
- Jul 4, 2026Begin-construction safe harbor closed. Projects that met it have up to four years to finish; new projects do not.
- Now to Mar 2027Sign, design, permit, order equipment, file interconnection. At about nine months from contract to completion, this is the window in which a system can realistically be running by year end.
- Dec 31, 2027Last day a solar system can be placed in service and claim the 30% credit.
- 2028 onNo federal credit for solar. Battery storage still qualifies. Bonus depreciation and rate protection continue.
Fine print your CPA will ask about
Systems of 1 MW AC and above must meet prevailing-wage and apprenticeship rules to get 30% rather than 6%. Most commercial rooftops are well under that line.
Projects starting construction after 2025 must meet federal rules on foreign-sourced components. We specify equipment that complies and put the sourcing in the proposal.
Florida C-corporations add bonus depreciation back for state tax and deduct it over seven years. Florida has no personal income tax, so pass-through owners take the full federal benefit.
Sources: IRS Notice 2025-42; IRC §48E as amended by the One Big Beautiful Bill Act (2025). Worked example below..
Worked example
A $400,000 system for a profitable pass-through business in Florida, placed in service in 2027:
| Item | Amount | Note |
|---|---|---|
| Federal credit (30%) | $120,000 | Dollar-for-dollar against federal tax; carries forward if not fully used |
| Depreciable basis | $340,000 | Cost less half the credit (85% of cost) |
| Bonus depreciation, year one | $340,000 deduction | 100% bonus for equipment acquired after Jan 19, 2025; a 35% federal bracket makes this worth about $119,000 |
| Federal tax benefit, year one | about $239,000 | Roughly 60% of the system cost, before a single kilowatt-hour of savings |
Illustrative only. Your figures depend on entity type, tax position, state treatment and equipment sourcing. PPM is not a tax advisor; your assessment includes a worksheet for your CPA.
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