Section 48E Tax Credit 2026: The Commercial Solar ITC

Section 48E is commonly described as a 30% investment tax credit on qualifying clean-energy property, including commercial solar and paired battery storage, when a project meets prevailing-wage and apprenticeship (PWA) requirements or is under 1 MW of AC capacity. Projects that skip PWA and exceed 1 MW are commonly described as dropping to a 6% base. None of those rates is a settled quote for your project. The form associated with the credit is IRS Form 3468. Commercial solar (§48E) is different — but the clock moved. Projects that missed the Jul 4, 2026 beginning-of-construction deadline generally must be placed in service by Dec 31, 2027. Figures on this page are general information, reviewed Oct 2026, not tax advice.

In this model, depreciation sits alongside the credit. Solar is often treated as 5-year MACRS property. Depreciable basis is often described as system cost minus half the credit claimed — for an assumed 30% credit, that is 85% of cost. Bonus depreciation can change the year of the deduction. That is not a determination for a specific taxpayer.

This model uses a combined federal-plus-state rate near 26% and illustrates a depreciation shield near 22% of system cost. Adding that to a 30% credit in the model can look like more than half of project cost. That illustration is not a settled tax result.

IRS Notice 2025-42 generally requires the Physical Work Test — physical work of a significant nature, plus a continuous program of construction — to establish that construction began before July 5, 2026. The Five Percent Safe Harbor is limited to low-output solar facilities of not more than 1.5 MW AC, subject to aggregation rules. Reviewed Oct 2026. General information, not tax advice. Projects that missed the July 4, 2026 beginning-of-construction deadline generally must be placed in service by December 31, 2027.