The Federal Solar Investment Tax Credit (ITC) has long been one of the most important incentives for businesses investing in renewable energy. Covering up to 30% of eligible project costs, plus potential add-on bonuses, the ITC significantly improves the financial case for commercial solar. 

However, the ITC isn’t static. It follows a stepdown schedule with firm deadlines that determine whether a business can capture the full 30% credit or risk receiving less. For commercial project owners and developers, understanding this schedule is critical to maximizing returns. 

In this blog, we’ll break down the ITC timeline in clear terms, so you know exactly what to expect — and when to act. 

Federal Solar Tax Credit Stepdown Schedule for Commercial Projects: Key Deadlines to Know

The ITC currently allows businesses to claim 30% of solar project costs as a federal tax credit. But the schedule includes deadlines that hinge on three key milestones: 

• Safe Harbor – Paying ~5% of project costs upfront to lock in the tax credit rate. 

• Beginning of Construction – Larger projects must show measurable progress to preserve the credit. 

• Placed in Service – Projects must be operational by specific deadlines to remain eligible. 

Key Dates for Commercial Solar Projects 

Here’s a simplified breakdown of the federal solar tax credit stepdown schedule that every business considering going solar in 2026 or 2027 should know: 

December 31, 2025: Last Day to Safe Harbor Before Procurement Rules Change 

• Projects 1.5 MW and smaller can “Safe Harbor” by paying ~5% of project costs. 

• Doing this secures the current ITC rules and avoids being subject to new procurement restrictions. 

January 1, 2026: Procurement Restrictions Begin 

• New rules prohibit sourcing certain solar components from countries such as China, Russia, and North Korea. 

• Why it matters: This may impact pricing, availability, and lead times for equipment. Businesses that plan ahead can minimize disruption. 

July 4, 2026: Safe Harbor and Construction Milestone 

• Projects smaller than 1.5 MW → Must Safe Harbor ~5% of project costs by this date to stay eligible for the 30% ITC and related bonuses. 

• Projects larger than 1.5 MW → Must show clear evidence of “Beginning of Construction” to preserve the full 30% credit. 

December 31, 2027: Placed in Service Deadline 

• Any project that did not Safe Harbor by July 4, 2026 must be fully operational and “placed in service” by the end of 2027. 

• Projects missing this deadline risk losing the 30% ITC, along with valuable add-on bonuses for things like domestic content or energy communities. 

What This Means for Commercial Solar 

For businesses considering solar, the stepdown schedule is all about timing. 

• Smaller projects (under 1.5 MW): You have more flexibility, but Safe Harboring early is the surest way to protect your credit. 

• Larger projects (over 1.5 MW): Delays can be costly — construction must begin by mid-2026 to stay on track. 

• All projects: Supply chain planning will become even more important once procurement restrictions take effect in 2026. 

Working with an experienced solar partner ensures your project is designed, financed, and scheduled in alignment with these critical deadlines. 

Strategies to Maximize Your Tax Credit 

• Safe Harbor early to lock in the 30% ITC plus associated bonuses and avoid procurement rule risks. 

• Align project timelines with construction deadlines — especially for large-scale commercial systems. 

• Keep front of mind equipment procurement strategies to meet compliance and bonus credit requirements. 

• Consult experts who understand tax law, financing, and EPC construction to keep your project eligible. 

Final Thoughts 

The federal solar tax credit remains one of the strongest financial incentives for businesses to invest in solar energy — but only for those who plan carefully.  

Missing a deadline could mean missing out on millions in savings. 

Now is the time to evaluate your solar project pipeline and secure your eligibility before procurement rules tighten and deadlines approach. 

Ready to explore how your business can take full advantage of the ITC? Contact Kokosing Solar’s commercial team today to start planning your project with confidence.