30% Investment Tax Credit (ITC) available for business solar (Inflation Reduction Act)
Bonus depreciation basis must be reduced by 50% of ITC claimed
Bonus depreciation on 85% of cost if 30% ITC claimed (100% - 50%×30% = 85%)
Combined ITC + MACRS + bonus depreciation can recover 50%+ of cost in year 1
What This Covers
Rooftop solar panels
Ground-mounted solar arrays
Solar inverters
Battery storage systems
EV charging stations (solar-powered)
Common Questions
Solar energy property is 5-year MACRS property. If you also claim the 30% Investment Tax Credit (ITC), you must reduce the depreciable basis by 50% of the ITC. Example: $100,000 solar system, 30% ITC = $30,000 credit, basis reduction = $15,000, depreciable basis = $85,000.
The ITC (Section 48) allows businesses to deduct 30% of the cost of solar energy systems from their federal taxes. For a $100,000 system, the ITC is $30,000. The ITC is a dollar-for-dollar credit against tax owed, not just a deduction.
Yes, but the depreciable basis must be reduced by 50% of the ITC first. On a $100,000 system with 30% ITC, the depreciable basis is $85,000. You can then apply bonus depreciation to that $85,000.
Yes. Solar energy property qualifies for Section 179 expensing, subject to the annual limit. The same basis reduction rules for the ITC apply.
Tax disclaimer: This calculator provides estimates based on standard IRS MACRS rules from Publication 946. Your actual depreciation deduction may differ based on business-use percentage, the mid-quarter convention, state tax conformity, bonus depreciation phase-outs, and other factors specific to your situation. Always consult a licensed CPA or tax professional before making tax decisions.