The solar tax credit is scheduled to step down over the next few years. On January 1, 2021, the tax credit will reduce to 22%. The safe harbor provision allows commercial companies to take advantage of 2020's full 26% solar tax credit, even if their system can't be completed until the following year(s).
How to "Safe Harbor" Your Commercial Solar Project
Commercial businesses are able to "safe harbor" the 26% tax credit by taking a few simple steps. The business must be under contract with a solar provider and have made a non-refundable five percent down payment by December 31. These projects will have four years to be completed to qualify for the safe harbor provision. Which means you'll have until December 31, 2024, to complete the project.
This allows businesses to take advantage of the savings while being able to plan for future construction.
Solar Tax Credit Schedule
After this year, the tax credit is not completely eliminated, just reduced. It is on a scheduled step-down over the next few years. This tax credit is a valuable tool for businesses to level their energy costs and save money.
The tax credit will lower from:
26 percent in 2022.
22 percent in 2023.
- 0 percent in 2024.