Your Business Can Still Get the 30% Solar Tax Credit. Here’s What You Need to Know.
If you’re a business owner on the Central Coast, you don’t need us to tell you that PG&E rates are on the rise. It’s a constant pressure on your bottom line. But what if you could turn that unpredictable expense into a fixed, manageable cost and a long-term investment in your property?
The 30% federal Investment Tax Credit (ITC) for commercial solar has helped hundreds of local businesses do just that. While the residential tax credit is set to expire at the end of 2025, businesses still have time (and plenty of reasons) to go solar.
This article breaks down the timeline and how you can plan ahead to make sure you don’t leave tens of thousands of dollars on the table.
Timeline for Businesses: The 2026 & 2027 Deadlines
You might have heard that the solar tax credit is ending in 2025. That is true for residential projects, but thanks to the Inflation Reduction Act (IRA) of 2022, your commercial solar project can still qualify for the full 30% tax credit if it meets one of these two deadlines:
- You begin physical construction by July 4, 2026.
- Your system is fully installed and operational by December 31, 2027.
These deadlines give you a longer timeline to explore your options without feeling rushed.
How to Secure Your 30% Credit: Planning for 2026
The most important date to keep in mind is July 4, 2026. To secure your 30% tax credit, your project must begin physical construction by then. While that gives you some time, the planning process for a commercial solar installation (including design, engineering, and permitting) can take several months. Starting the conversation now ensures you’ll be ready to break ground well before the deadline.
It’s also worth noting that new Foreign Entity of Concern (FEOC) rules will take effect in 2026, which may affect equipment availability and pricing down the road. By planning ahead and starting the process sooner rather than later, you can get ahead of any disruptions in the supply chain to ensure that your materials are reserved for your project.
For businesses who are able to commit right away, there is an additional strategy called “safe harbor.” For most commercial projects under 1.5 MW AC, spending just 5% of the total project cost on qualifying hardware before December 31, 2025, can lock in the current rules and give you an even longer, four-year window to complete your installation. It’s a great bonus for maximum flexibility, but we suggest that businesses should focus on planning for a 2026 construction start date.
Who Benefits Most from Commercial Solar?
Any business with a high electricity bill can see a dramatic impact from solar. We’ve helped hundreds of businesses and residences across the Central Coast, and while every situation is unique, we often see the biggest savings for:
- Agricultural Businesses: Like most in the agriculture industry, Koppes Plants was trying to balance the growing demand for their produce with the escalating cost of energy. Their 82 kW system is now saving them $34,000 a year and is just three years away from paying for itself.
- Manufacturing & Industrial: Businesses that use state-of-the-art equipment often have the highest energy costs. Rinaldi Tile and Marble were taking a big bite out of their operating budget to power their cutting and polishing equipment. After Day One Solar installed solar on their warehouse roof, their electricity bill went down and their profits went up, saving $24,000 a year.
- Commercial Property Owners: Whether you own office buildings, shopping centers, or multi-tenant industrial parks, solar increases your property value and can provide a new revenue stream.
- Retail & Hospitality: From auto dealerships like Watsonville GMC (saving $14,000 a year) to grocery stores, hotels, and restaurants, solar is a proven way to reduce high operating costs from high use electrical systems like lighting and HVAC systems.
- Churches & Nonprofits: You don’t need to pay taxes to benefit. Through the Inflation Reduction Act’s “Direct Pay” option, tax-exempt organizations can now receive a cash payment from the IRS equal to the full value of the tax credit. Holy Cross Church & School is a great example, now saving $50,000 a year.
Why You Should Start Planning Now
The July 4, 2026 construction deadline will be here before you know it. As we get closer to that deadline, we expect to see increases in supply chain demands and a reduction in available solar contractors as their schedules fill up.
Starting the process now gives you plenty of time to properly research and identify the system that’s right for your business, establish a financial plan, and get all the necessary permits in place before the deadline. That way we can focus on ensuring that your equipment and labor is reserved to begin your project, avoiding any possible supply chain delays or labor shortages.
Day One Solar is a local, family-owned business that has been serving Santa Cruz and the Central Coast for over a decade. We live here, we work here, and we’re committed to helping our community thrive.
If you’re ready to see what solar can do for your business, let’s talk. Explore our commercial solar solutions and request a free, no-pressure solar analysis to get a clear picture of your potential savings.
