Curious about the federal solar tax credit for commercial projects? Learn which costs qualify and how to make the most of incentives to reduce your energy expenses and boost long-term savings.
⚠️Important note: Though Artisun Solar has 14 years of experience in the commercial solar industry, we aren’t your CPA or lawyer. The following is for informational purposes and doesn’t constitute legal advice.
In this Article
- Overview of the Federal Solar Tax Credit (ITC) for commercial projects
- ITC restrictions every business owner should know
- Whether roof replacement costs qualify for commercial solar tax credits
- What this means for your business
- Glossary of common solar terms
- Related FAQs businesses ask about roofs and solar
Federal Solar Tax Credit Overview
The Solar Investment Tax Credit (ITC), better known as the solar tax credit, is designed to encourage businesses to invest in renewable energy, specifically solar.
By offsetting 30-50% of the costs associated with installing a commercial solar project, the ITC makes solar energy more financially attractive for businesses across the country.
Eligible businesses can claim a percentage of their solar project costs as a direct reduction in their federal tax liability, including equipment, installation, interconnection, and related expenses.
Key Benefits of the ITC for Commercial Solar
- Cost Savings: Reduces the overall investment in solar, making it more affordable for businesses of all sizes.
- Improved ROI: Lowers the payback period, allowing businesses to see financial returns sooner.
- Scalability: Applies to projects of varying sizes, including ground- and rooftop-mounted solar arrays.
What Businesses Should Know About the ITC for Solar
The One Big Beautiful Bill (OBBB), signed into law in July 2025, introduced significant enhancements to the ITC. In the process, solar is even more of an appealing solution for controlling your energy future with solar.
Note: The following only refers to commercial solar systems and not residential solar.
The Biggest Change: The End of the ITC
The OBBB requires commercial solar projects to be in service (e.g., generating energy) by the end of 2027 to qualify for the full tax credit (30–50%).
Examples of Artisun Solar clients that saved with the ITC:
- Steel & Pipe Supply (Oklahoma): Saved $1,116,000 on a 1,800 kW system
- Storm Products (Utah): Saved $298,350 on a 568.4 kW system
- Brian Tooley (Kentucky): Saved $211,200 on a 298.8 kW system
- Champion Precast (Missouri): Saved $93,003 on a 185.3 kW system
- Helluva (South Dakota): Saved $31,716 on a 36.9 kW system
- Raynor Garage Doors of Kansas City (Kansas): Saved $26,000 on a 32.4 kW system
Options for Projects Under 1.5 MW (AC)
First, a quick definition: MW (AC) refers to megawatts of alternating current, which is the usable electricity your solar system sends into your facility or the grid. This is different from DC (direct current), which is how solar panels naturally generate power before it’s converted by inverters.
For projects under 1.5 MW AC, here are your options to secure the full ITC before it phases out:
1. Start Construction Soon
Beginning your project early ensures your system is operational well before the Dec. 31, 2027 deadline. Acting now also helps you:
- Avoid supply chain delays and installer backlogs as the deadline approaches
- Lock in equipment and material pricing before additional tariffs or FEOC rules drive costs up
- Start enjoying utility savings sooner, improving ROI
This is the safest route for companies that don’t want to gamble with timing.
2. Safe Harbor Before July 4, 2026
By making a 5% deposit toward your project before July 4, 2026, you can “safe harbor” your ITC rate. This locks in the full credit and gives you four years to complete construction.
- If you safe harbor in 2025 → you have until 2029.
- If you safe harbor in 2026 → you have until 2030.
This option is ideal for businesses that know they want solar but need more time to finalize financing, coordinate with a roof replacement, or align with facility upgrades.
3. Safe Harbor After July 4, 2026
You can still safe harbor with a 5% deposit after July 4, 2026, but the rules change: the project must be completed and generating electricity by December 31, 2027. That’s a much shorter runway and leaves little room for delays.
4. Wait and Watch
Some businesses may choose to hold off on committing. While that may sound flexible, it’s the riskiest path:
- Project timelines may stretch longer than expected
- Rising material and labor costs can erode ROI
- Most importantly, you could miss the deadline altogether and lose access to the ITC
What About Projects Over 1.5 MW (AC)?
Larger projects have different safe harbor requirements, including stricter construction and financing rules. Because these details can vary widely by facility and jurisdiction, it’s critical to work with an experienced commercial solar developer.
Artisun Solar has guided companies across the Midwest through ITC deadlines for more than a decade. Whether your project is 200 kW or 2 MW, we’ll help you structure it to maximize incentives, minimize risk, and ensure you meet IRS requirements on time. Start your free solar analysis here.
Do roof replacement costs qualify for commercial solar tax credits?
One of the questions we’re asked by clients is if roof replacement can qualify for the ITC.
Looking at IRS Section 48, which defines eligible energy property, the credit applies to equipment “integral to the generation of electricity.”
The answer: It depends.
- Full roof replacement: 🔴 No. Replacing an old roof due to age, leaks, or building upgrades is not considered part of the solar energy property.
- Roof enhancements that increase solar production: 🟡 Maybe. The ITC may cover incremental costs to increase solar production, such as:
- Spray coatings
- Reflective or “cool” roofing that increases bi-facial panel production
Examples:
- A 200,000 sq. ft. distribution center replaces its 20-year-old roof. The cost of the new roof does not qualify for the ITC.
- The same business adds a reflective membrane to boost solar production by 6%. The incremental cost of that membrane may qualify.
⚠️We recommend consulting your CPA and/or legal team for more specific information about your roof plans and ITC coverage.
What This Means for Your Business
Understanding how the solar tax credit interacts with roof replacement costs can have a major impact on your bottom line. While a standard roof replacement generally isn’t eligible for the ITC, strategic upgrades that directly enhance solar performance can unlock additional savings.
By planning your solar project alongside any roof improvements, you position your business to maximize incentives, reduce energy costs, and accelerate your return on investment.
Working with an experienced commercial solar developer ensures you can:
- Lock in substantial tax credits while keeping construction timelines flexible
- Optimize energy production with roof enhancements that support solar performance
- Protect against rising energy costs by generating your own clean electricity
- Boost long-term ROI by aligning facility upgrades with renewable energy investments
Even small decisions today, like timing your roof work or selecting performance-enhancing materials, can translate into tens or even hundreds of thousands in savings over the life of your solar system.
Ready to maximize your solar investment? Contact Artisun Solar today to see how we can help your business save on energy costs and take full advantage of the ITC.
Solar Glossary
- Alternating Current (AC): The electricity used in your business. Solar systems convert the power from panels into AC so it can run your facility or go to the grid.
- Direct Current (DC): The electricity that solar panels naturally produce before conversion.
- Inverters: Devices that change the DC electricity from solar panels into AC electricity your business can use.
- Investment Tax Credit (ITC)/Solar Tax Credit: A federal credit that lets businesses deduct a percentage of commercial solar project costs from federal taxes.
- Kilowatt (kW): A unit of power showing how much electricity a solar system can produce. Smaller commercial systems are measured in kW.
- Megawatt (MW): A larger unit of power for bigger commercial or industrial solar projects.
- One Big Beautiful Bill (OBBB): The law passed in July 2025 that improved the ITC and set deadlines for commercial solar projects to qualify for the full tax credit.
- Roof Enhancements for Solar: Special roof upgrades, like reflective coatings or membranes, that improve solar production and may qualify for partial ITC credit.
- Safe Harbor: A way to lock in the full ITC by paying a 5% deposit early, even if your project takes a few years to finish.
- Section 48: The IRS rule that defines which solar costs qualify for the ITC.
- Solar Array: A group of solar panels working together to generate electricity.
FAQs About the Solar Tax Credit and Roof Replacement
- How long do I have to get a solar project in service to receive full solar tax credits (ITC)? For projects under 1.5 megawatts (AC), you must have the system in service by December 31, 2027, to be eligible for the full tax credit. Projects that are energized after this date will not be eligible for any ITC.
- Do roof replacement costs fall under the ITC? A full roof replacement is unlikely to be covered by the ITC. However, certain roof enhancements or incremental costs directly related to increasing solar production may qualify, such as spray coatings or reflective roofing for bi-facial solar panels.
- How do I know if my roof plans qualify for incremental costs? Because the rules for tax credits can be complex and are subject to change, it is highly recommended that you consult with your CPA or legal counsel for specific guidance on your business and facility.
- What is “safe harbor” for a commercial solar project? Safe harbor is an IRS provision that allows a business to secure the full ITC rate for their project by meeting a specific deadline. By putting down a 5% deposit on or before July 4, 2026, you can safe harbor your project and lock in the current full tax credit rates, giving you four years to complete the installation.
- Is the federal solar tax credit only for rooftop solar projects? No, the ITC applies to a variety of commercial solar installations, including ground-mounted solar arrays as well as rooftop systems.
