The Big Beautiful Bill, signed on July 4th, 2025, is a major change in federal energy policy that overhauls how commercial solar projects can claim and qualify for incentives before they disappear. Arch has compiled the best information available to outline the clearest path for maximizing your project’s incentives and eliminating future complications that could jeopardize project financials.
The Bottom Line for near term projects is clear: Starting your solar project in 2025 protects you from incoming new restrictions and locking in the highest amount of tax credits available. Beginning construction before the end of 2025 locks in the basic 30% tax credit and keeps the door open for potential bonus credits established in the 2022 IRA.
Waiting until 2026 does not mean solar is no longer viable, but it does mean additional project scrutiny from new FEOC (Foreign Entity of Concern) rules. Via Executive Order, the federal government has also made it clear that stricter qualifications for safe harboring and start of construction designations are incoming.
Solar safeguards your utility bills against major changes like we’ve recently seen, and we want to empower you with the tools and knowledge to make this choice without additional burdens. Â
Incentives in Detail
| Incentive Modified | Before end of 2025 | 2026 and Beyond | Source |
| 45Y & 48E (Investment Tax Credit) | Projects that begin construction qualify without additional restrictions | Projects must be placed in service by December 31, 2027, unless construction began within 12 months of enactment (by July 4, 2026) | Reconciliation Bill, Section 45Y / 48E; White & Case |
| Start of Construction (Safe Harbor Rules) | Treasury guidance allows either 5% cost incurred or physical work test | Executive order mandates tighter rules by mid-August 2025; stricter enforcement of what qualifies as beginning construction | Executive Order, July 7, 2025; IRS Notice 2013-29 |
| Foreign Entity of Concern (FEOC) Restrictions | Not applicable | Taxpayers using certain Chinese equipment, financing, or ownership may be ineligible | Reconciliation Bill FEOC provisions; Section 45Y/48E restrictions effective 2026 |
| Domestic Content Bonus Credit (48E) | 40% domestic content threshold for bonus | Threshold increases to 45% (2025), 50% (2026), 55% (2027+) | Reconciliation Bill fix to IRA drafting error; Frost Brown Todd |
| Depreciation (MACRS + Bonus Depreciation) | 5-year MACRS and 100% bonus depreciation (if applicable) available | 5-year MACRS continues for 48E projects; legacy projects starting after 2024 may lose 5-year status | Section 48, MACRS provisions; Reconciliation Bill tax depreciation changes |
| Transferability of Tax Credits | Permitted, including to unrelated entities | Still permitted, but transferees must not be disqualified under FEOC rules | IRC §6418; Reconciliation Bill |
| Battery Storage Eligibility | Fully eligible for 48E credit, no placed-in-service deadline | No change; still eligible with no in-service deadline | Section 48E; Treasury guidance; Norton Rose Fulbright |
| Critical Minerals / Domestic Manufacturing Credit (45X) | Full credit available through 2030 | Phase-down begins in 2031; additional restrictions on stacking for integrated production | Reconciliation Bill changes to 45X; Solar Energy Industries Association |
| Project Completion Deadline | Typically 4 years from start under existing guidance (Notice 2013-29) | Mandatory placed-in-service by Dec 31, 2027 for projects starting after July 4, 2026 | IRS Notice 2013-29; Reconciliation Bill transition rules |
As always, we are here to help get your project started while the path forward is the clearest it can be.
