Commercial Solar: What Trump’s “One Big Beautiful Bill” Means for Commercial Energy Projects
The massive budget reconciliation bill that President Trump signed on July 4, 2025, may set off a rush to start construction of more projects by year end 2025 and again by early July 2026 to qualify for federal tax credits.
If you’re a business owner or operator of a commercial facility (including non-profits) and are considering solar, the clock is ticking to start projects and lock in the incentives that will yield the best project economics and reduce facility energy costs.
The final version of the bill, OBBBA, allows solar and wind projects that begin construction less than one year after the bill’s enactment, and placed into service within four years, to still claim the full ITC credit. Projects that start construction after that period (July 4, 2026) would still need to be placed in service by the end of 2027. According to Roth Capital Partners, “this would effectively extend the 100% ITC/PTC through mid-2030 for projects that are able to start construction by mid-2026.”
Key highlights from the final Bill:
- Non-residential (commercial & utility-scale) solar projects that “start construction” less than 12 months after bill enactment and place into service within four years can still claim full ITC/PTC (48E/45Y) credit.
- There are two main ways to ‘start construction’ also known as ‘Safe Harbor’:
- “Incur” at least 5% of the total project cost.
- Start “physical work of a significant nature” at the project site.
- Updated Note: The White House issued an Executive Order on Monday July 7th, requesting the Treasury department to issue updated guidelines for the Safe Harbor process within 45 days.
- The ITC (48E) for battery energy storage systems (BESS) is still exempt from the accelerated phase-down and intact through 2033.
- The Bill restores a 100% depreciation bonus on property acquired or placed in service after January 19, 2025.
- The Domestic Content Bonus, which provides an additional 10% to the value of the ITC (40% total) requires projects use a certain number of U.S.-made components, will require; the Bill updated these thresholds to:
- 45% U.S. content for projects started in 2025
- 50% U.S. content for projects started in 2026
- The Energy Community Bonus remains – the energy community bonus added an additional 10% to the value of the ITC for projects located in ‘energy communities’ which are areas within or adjacent to a census tract where coal mine, coal plant or other fossil fuel related facilities have been recently closed. This is applicable to Campbell Industrial Park in Kapolei on Oahu.
- Direct Pay Remains—for Nonprofits and Governments Only
- Nonprofits, schools, and tribal or government entities can still access “direct pay” (a cash payment in place of a tax credit).
- Homeowners do not qualify for direct pay under the new law
- Transferability Remains – previous legislation passed in 2022, the Inflation Reduction Act (IRA) created a mechanism for project owners to sell the tax credit for a cash payment. This was helpful for project owners who don’t have the tax liability to use the credit and provided an additional to recover upfront project costs.
- New FEOC (“foreign entity of concern”) rules will deny credits to projects that use too much Chinese equipment. The project-level restrictions will not apply to projects that are under construction by the end of 2025. The FEOC rules are complicated; they will take effect in 2026 and there will be more details to follow.
What You Can Do Now
- Contact us and speak with our project development team to learn more about the new changes and their impact on your energy project.
- Safe Harbor by December 31 to get an advance start on the process and limit exposure to potential future restrictions such as the FEOC rules.
- Ask about battery storage—the 30% credit applies to batteries; the tax credit storage will remain in place into the future.
- Talk to your tax advisor to confirm how the credits will apply to your specific tax situation.
