When you convert a residential system into a commercial asset, your project may qualify for a 30% federal commercial tax credit under IRS Section 48. This credit applies to the full installed cost of the system and is one of the most valuable incentives available. Unlike the traditional residential credit, the commercial credit can be paired with additional deductions and depreciation benefits allowing high-income earners and business owners to dramatically reduce tax liability while increasing the investment return of their solar system.

Write off the interest you pay on your solar loan for the entire term of the agreement. Because the system is treated as a commercial asset, the interest portion of your financing becomes a fully deductible business expense. Every payment you make over the life of the loan generates additional tax savings, reducing your taxable income year after year. This transforms what would normally be an out-of-pocket residential cost into a powerful long-term deduction compounding alongside your depreciation and commercial tax credits to significantly boost your overall return.

Because most solar loans typically front-load the interest into the first 5–7 years of the loan term, the majority of the payments you’ve already made are primarily interest. And when your system is treated as a commercial asset, that interest becomes a deductible business expense. This means the early portion of your loan, normally the most interest-heavy, can generate significant tax deductions, stacking alongside your commercial credit and depreciation benefits!

One of the most powerful advantages of converting your solar system into a commercial asset is the ability to depreciate the entire project. Under current federal rules, commercial solar assets can take accelerated depreciation allowing the system’s full cost to be deducted over a short timeframe. This creates a substantial tax benefit for high-income earners and business owners, often resulting in tens of thousands of dollars in additional savings. When combined with the commercial tax credit and interest deductions, depreciation becomes a major driver of your overall return on investment.

Projects located in designated Energy Communities can qualify for an additional 10% commercial tax credit on top of the standard 30% Investment Tax Credit. These bonuses were created to encourage development in areas with high unemployment, fossil-fuel industry transitions, or historically energy-dependent economies.

If your property is located in one of these zones, your commercial solar project may receive a total credit of up to 40% before depreciation and other incentives are even applied.

You can check whether your address qualifies for this bonus HERE.

Between the Energy Community Bonus, potential Domestic Content adders, and accelerated depreciation, many projects unlock significantly higher commercial savings than homeowners expect. We evaluate all qualifying incentives for you during setup.