Commercial Solar Tax Credits Are Still Available in Utah, but the Clock Is Running
The homeowner solar credit has ended, but businesses, farms, and nonprofits in Utah can still use federal tax credits, accelerated depreciation, and state incentives for solar. Most new commercial solar projects now need to be placed in service by December 31, 2027. Here is what is available and why it pays to start planning now.
Residential vs. Commercial: What Changed
The One Big Beautiful Bill Act (Public Law 119-21), signed July 4, 2025, ended the homeowner Residential Clean Energy Credit (Section 25D) for expenditures made after December 31, 2025, according to the IRS. Business-owned solar falls under a different credit, the Clean Electricity Investment Credit (Section 48E). That credit is still available, but the law added new deadlines for solar.
Who Qualifies
- Businesses that own a solar system on their building, carport, or land, including offices, retail, warehouses, and manufacturers.
- Farms and ranches, and owners of commercial and multifamily rental property.
- Tax-exempt groups such as nonprofits, churches, schools, and local governments may be able to receive the credit as a direct payment through IRS elective pay.
What the Federal Commercial Credit Is
The Section 48E Clean Electricity Investment Credit is a credit based on a percentage of the qualified cost of a solar system:
- Base credit: 6% of qualified cost.
- Increased credit: 30% if the project meets prevailing wage and apprenticeship requirements, or if it is under 1 megawatt (AC), which is exempt from those requirements. Most small and mid-sized business systems are under 1 MW.
- Possible bonus amounts: projects can earn more for using qualifying domestic content, for being in an energy community, or, for smaller projects, through the allocated low-income communities bonus.
Accelerated Depreciation: The Second Big Benefit
On top of the tax credit, a taxable business can generally recover the cost of a solar system through depreciation much faster than it could for a building.
- 5-year MACRS: under IRC §168(e)(3)(B), property that qualifies for the Section 48E credit is classified as 5-year property, so it is depreciated over five years instead of decades.
- 100% bonus depreciation: the One Big Beautiful Bill Act (§70301) made 100% first-year bonus depreciation permanent for qualified property acquired after January 19, 2025, according to IRS Notice 2026-11. That can let a business deduct the full depreciable basis in the year the system is placed in service, or elect the 5-year schedule instead.
- Basis adjustment: under IRC §50(c)(3), the depreciable basis is reduced by half of the investment tax credit claimed. For example, a 30% credit reduces basis by 15% of qualified cost.
Together, the credit and depreciation can offset a large share of a system’s cost in the early years. The actual value depends on your tax bracket, entity type, and whether you can use the deductions, so we do not quote generic totals. Ask your CPA how depreciation applies to your business.
Key Deadlines
- Construction began on or before July 4, 2026: these projects avoid the 2027 cutoff and generally get a longer window to finish, as long as work continues steadily.
- Construction beginning after July 4, 2026 (any new project starting today): the system must be placed in service by December 31, 2027 to qualify for the credit, under the One Big Beautiful Bill Act (Public Law 119-21, §70513) and IRC §48E as amended.
- Equipment sourcing rules: projects that begin construction in 2026 or later must meet new “prohibited foreign entity” (FEOC) material-assistance rules, so equipment choices matter.
- Utah state credit: Utah’s commercial Renewable Energy Systems Tax Credit expires for systems placed in service after January 1, 2028.
Other Incentives to Stack
- Utah commercial tax credit: a refundable credit of 10% of eligible system cost, up to $50,000, through the Utah Office of Energy Development. Certain larger systems use a production-based credit instead.
- Accelerated depreciation: 5-year MACRS and 100% bonus depreciation for taxable owners (see above).
- USDA REAP for rural businesses and agricultural producers: USDA says it is not accepting REAP grant applications right now, but guaranteed loan applications can still be submitted.
- Rocky Mountain Power net billing: under Schedule 137, power you export earns bill credits.
Why Act Now
Commercial projects take time. Design, engineering, permits, Rocky Mountain Power interconnection, and equipment lead times can take months. With the December 31, 2027 placed-in-service deadline and Utah’s state credit ending in 2028, starting in 2026 gives your project the best chance to finish in time. Since 2010, Rocky Mountain Renewable Energy has designed and installed commercial systems across Utah, and we can help you set a realistic timeline.
Frequently Asked Questions
Is the 30% solar tax credit gone?
For homeowners, yes. For businesses, no. The Section 48E commercial credit can still be 30% for projects that meet the wage and apprenticeship rules or are under 1 MW, as long as they meet the deadlines.
If we start a project today, what is our deadline?
Projects that begin construction after July 4, 2026 must be placed in service by December 31, 2027.
Can we take depreciation and the tax credit together?
Generally, yes. Taxable owners can usually claim both. The depreciable basis is reduced by half of the credit, and a CPA should confirm how it works for you.
Can a nonprofit or church benefit?
Possibly. Eligible tax-exempt groups may be able to use elective pay to receive the credit as a payment from the IRS.
Can I combine federal and Utah incentives?
Often, yes. How they combine depends on your tax situation, so review it with your tax advisor.
Find Out What Your Business Qualifies For
Rocky Mountain Renewable Energy, 778 Parkway Dr, North Salt Lake, UT 84054.
This page is general information as of October 2026, not tax or legal advice. Tax credit and depreciation rules, bonus amounts, and begin-construction guidance are complex and can change. Consult a qualified tax professional about your situation.