Safe Harbor for Solar Projects in 2025: Protect Your Tax Credits Through 2029

Right now, commercial projects can claim a federal solar tax credit worth up to 50% of their project, but this incentive is changing soon. To freeze the financial incentives as they exist today, including the full solar tax credit, you can safe harbor your project with a 5% deposit.

This deposit counts as the beginning of construction, protecting your project for four years. The full solar tax credit remains available as long as construction is completed within that timeframe.

If safe harbor is secured in 2025, your project will be exempt from FEOC regulations that take effect in early 2026 and could complicate claiming solar tax credits.

Safe harbor is a straightforward way to secure your incentives and move forward on your solar project without rushing. It gives you the flexibility to schedule construction when your facility or business is ready without losing out on today’s incentives.

No. Safe harbor is only available through July 4, 2026. After that date, all solar projects will need to be fully constructed and operating by Dec. 31, 2027, for the full solar tax credit. FEOC regulations will apply.

When you safe harbor your project, you have four years to complete it to comply with current regulations and claim full solar tax credits.

If you safe harbor your project in 2025, FEOC rules won’t apply since they take effect in early 2026. This allows you to receive full solar tax credits, worth up to half of your project, if you build by 2029.

FEOC regulations take effect in early 2026 which will apply to your project if safe harbored in 2026. While you have four years to build for full solar tax credits, FEOC will increase material costs and make claiming the credits more difficult

FEOC applies to components of materials that are made in foreign entities of concern, which includes China and Russia. It also relates to components made by companies headquartered in these countries. The exact rules are expected in early 2026, and we’re working closely with our suppliers in anticipation of these changes. 

If you safe harbor once FEOC regulations are in place, all of the material used to build your project will need to meet those requirements. This is going to impact sourcing and cost. 

FEOC is expected to make it considerably more difficult to claim your solar tax credits, even if you fully qualify. We recommend safe harboring your project in 2025 to avoid FEOC regulations.

No additional fee required. Safe harbor is available to all projects with a signed contract and a 5% deposit for most projects. Larger projects may have additional requirements. Talk to our team for more information. 

Without safe harbor, solar projects completed after 2025 will need to apply FEOC regulations to all building materials and need to be fully operational by Dec. 31, 2027, to claim 30-50% solar tax credits. FEOC regulations are expected to increase material costs and sourcing, and construction timelines are expected to stretch.

By itself, solar is a 30-year asset that enables businesses to control energy costs and comply with environmental initiatives. Solar tax credits, which cover 30-50% of your project costs, significantly reduce the payback timeline. 

With the solar tax credits, most businesses see a return within 5 years, with some calculated in months rather than years. Without the solar tax credits, the return timeline doubles. If you were initially expecting a 3-year return, without solar tax credits, you could expect a 6-year return.

Safe harbor can apply to systems that are both ground- and rooftop-mounted.

Yes. You can combine it with the USDA REAP and other incentives. However, safe harbor only applies to federal policies, such as the solar tax credit. Local and state incentives won’t be protected.

For example, if your state offers a solar tax credit or your utility provides a solar rebate that ends before your project is completed, it wouldn’t apply to your project even if safe harbor is in effect. 

 In September 2025, new safe harbor rules went into effect for solar projects 1.5 megawatts (MW) AC or larger. 

Most projects are smaller than 1.5 MW, so they can continue following the safe harbor rules we’ve outlined before.

For projects above this size, our team will walk you through the updated requirements and help make sure your project secures safe harbor without missing any incentives.