How will the Solar Investment Tax Credit affect projects?
As the July 2026 deadline for the Investment Tax Credit for commercial solar projects approaches, many contemplating solar have asked this question – how will these ITC changes affect my solar project? In this post, we will provide an overview of the changes coming in July, as well as how this may affect your potential project.
How does the investment tax credit (ITC) for solar work?
The tax credit as it currently stands allows system owners to deduct 30% of a solar installation’s cost from their federal taxes. It is a dollar-for-dollar reduction on total system expenses to lower tax liability. While the minimum tax credit starts at 30%, projects can also qualify for bonus credits if they meet certain domestic content and low-income area criteria. The ITC is a critical component for keeping the cost of solar energy down for ratepayers across the country.
What has changed?
Following a July 2025 Executive Order and a subsequent Treasury Department notice, solar projects will no longer qualify for the federal Investment Tax Credit beginning in July 2026. The credit is currently under an extension though the Inflation Reduction Act. To qualify for the existing tax credit, solar and wind projects must begin construction before July 4th 2026, or complete construction by the end of 2027 if activity began prior to the July 2026 deadline.
Will there be a replacement for the ITC?
Right now, there is no confirmed replacement for the federal Investment Tax Credit when it expires later this year. Federal agencies have proposed new incentives, but lawmakers have not signed any into law at this time. If lawmakers don’t pass new laws by the deadline, the federal government will stop offering an ITC-style tax credit.
This change will apply to future solar projects. To view the most recent changes to ITC guidelines and policies, visit the IRS website here.
