Commercial Solar Still a Smart Investment, But Incentives Are Changing
northwindre.com • September 17, 2025
While solar is a sound investment for the future, maximizing federal tax credits now requires careful planning and quick action in 2025.
The fundamental value of commercial solar, long-term financial stability, predictable energy costs, and increased energy independence, remains strong. However, recent federal legislation has drastically altered the landscape of tax incentives, creating a new urgency for businesses considering an installation.
Why commercial solar is a smart long-term investment
Beyond the tax credits, the benefits of commercial solar are built to last for decades:
- Cost savings and stability: Solar energy significantly reduces electricity bills and hedges against volatile utility rates, as Wisconsinites are expected to experience continued increases in the cost of purchasing electricity.
- Energy independence: On-site generation helps secure your business's energy supply, protecting against grid instability.
- Environmental stewardship: Investing in renewables boosts brand image and demonstrates a commitment to sustainability, and adds a unique marketing opportunity.
- Increased property value: Buildings with solar installations can see improved net operating income (NOI) and higher resale values.
A new reality for federal incentives:
With the signing of the "One Big Beautiful Bill Act" (OBBBA) on July 4, 2025, and subsequent IRS guidance, the rules for federal incentives have changed, affecting commercial projects under Sections 48E and 45Y.
Key changes for commercial solar:
- Firm Deadlines: To secure the full 30% tax credit, wind and solar projects now face strict timelines. The sunset of the credit depends on when construction begins:
- Projects that begin construction in 2025 are exempt from complex Foreign Entities of Concern (FEOC) compliance rules, which will grow stricter each year.
- If the project starts construction by July 4, 2026, the business must complete the project within four years.
- If construction begins after July 4, 2026, the project must be installed and placed in service by December 31, 2027.
- Stricter "Beginning of Construction" Rules:
- As of September 2, 2025, the simpler 5% "safe harbor" test is no longer available for new projects over 1.5 MW. These larger projects must now perform "physical work of a significant nature" to meet the "commence construction" requirement. For smaller projects under 1.5 MW, the 5% safe harbor test is still available until the July 4, 2026, deadline.
- New Foreign Entity Rules:
- Starting January 1, 2026, projects become subject to new restrictions on sourcing equipment from FEOC. Projects that begin construction in 2025 are exempt from these complex compliance rules, which will grow stricter each year.
Why you should act in 2025:
For businesses with solar plans, moving forward in 2025 offers a unique opportunity to maximize financial returns under the most favorable rules:
- Lock in the highest incentives: Secure the full 30% tax credit while also potentially taking advantage of 100% bonus depreciation for maximum first-year tax savings.
- Avoid complex regulations: By starting construction in 2025, you bypass new and stricter sourcing restrictions (FEOC) that take effect in 2026. This simplifies your supply chain management and reduces the risk of non-compliance penalties.
- Secure a longer completion window: Starting construction in 2025 locks in the eligibility for a four-year placed-in-service window. This gives your business a larger cushion of time to complete the project, navigate supply chain issues, and handle any unexpected delays compared to waiting until 2026.
The window for seizing these benefits is tighter than it has ever been. Given the months-long process for commercial installations, including design, permitting, and construction, delaying past 2025 could mean missing out on significant tax savings.
Disclaimer: We are not tax professionals; we are solar experts. Please consult with your tax advisor to see how the Federal Tax Credit can work best for you.
SOURCES:
Do you know the benefits of using solar energy? Keep reading to learn more about how solar energy is changing the world and how you can do your part.
Across the United States, more schools than ever are turning to solar energy—and it’s easy to see why. According to Generation180’s Brighter Future 2024 report , the amount of solar installed on K-12 schools has tripled since 2015. Today, more than 6 million students attend a solar-powered school, experiencing firsthand how clean energy can power classrooms and communities.
Maintaining solar power systems boosts efficiency, longevity, and reliability. Regular upkeep ensures cost savings and sustainable energy for years.
Discover seven compelling reasons to hire solar services, from cutting energy costs to boosting property value, and make your home more sustainable.
Choosing professional solar services over DIY installations offers unmatched expertise, safety, compliance, and long-term savings.
I went solar with Northwind, and it was a great experience! Since friends don’t let friends miss out on solar, I wanted to refer you to Northwind so you can see if it might be a good fit for you too, especially with this being the final year to claim the 30% residential solar tax credit . Just fill out the form below, and Northwind will be in touch to explore your options and provide a free, no-obligation solar estimate.  Be sure to include my name so they know I sent you!
A major shift in U.S. energy policy is here.
Right now, the federal Investment Tax Credit (ITC) offers a 30% tax credit to businesses that install solar energy systems. Originally scheduled to continue through 2033, the current Senate version of the bill maintains this 30% rate only through the end of 2025. After that, the credit is set to step down sharply: 18% in 2026, 6% in 2027, and 0% in 2028 and beyond. Don’t Miss the Safe Harbor Window Fortunately, there’s a way to lock in the full 30% credit before it’s reduced. Under the IRS’s "safe harbor" provision, you can preserve the full ITC by beginning physical work on your project or making a minimum 5% down payment by the end of 2025 — even if your system is completed in 2026. This is a powerful opportunity to secure long-term financial benefits while the full federal incentive is still available. Stackable Incentives Make the Financials Even Better Beyond the ITC, there are several additional programs that can dramatically reduce your project’s net cost: 10% Domestic Content Bonus: Earn an extra 10% tax credit for using U.S.-made solar components. Focus on Energy Rebates: A Wisconsin-based program offering upfront cash rebates for solar projects. MACRS Accelerated Depreciation: A federal tax benefit that allows you to recover the cost of your solar system more quickly through tax deductions. Solar Central Wisconsin Grow Solar Group Buy: Group pricing and additional resources that make going solar more affordable for local businesses. When stacked together, these incentives can cover a significant portion of your total investment, all while reducing your energy bills for decades to come. Why Act Now Solar has always been a smart investment, but today’s environment is uniquely favorable. With utility energy costs rising and key federal credits sunsetting, 2025 is the year to take action. Whether you’ve previously explored solar or are just getting started, revisiting your project now could mean locking in tens of thousands of dollars in savings. Northwind Solar can help you navigate every step, from incentive qualification to project design and installation. Improve your profitability by making a high-performing energy investment in your business. Achieve energy independence, support local businesses, and contact Northwind Solar today! REQUEST A FREE ESTIMATE Reach out anytime at: 715‑630‑6451 ___________________ Additional Resources: Update on Residential Solar Incentive Changes Solar Incentives Overview Grow Solar Central Wisconsin Group Buy Program
Do you have questions about solar system benefits? Read this blog to learn more about breaking down the myths and real benefits of solar power.
PROGRAM UPDATE: Only 6 kW to go before we hit the 250 kW milestone and unlock the max Group Buy Discount for all participants—$0.15 per watt (up from $0.10/W today). For a typical 8 kW home system, that’s about an additional $1,200 in savings. Sign by Sept. 30 to lock this in.
Share On: