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Updated ITC Guidance: Secure 30% Solar Tax Credit Savings Post-‘One Big Beautiful Bill



One Big Beautiful Bill, commercial solar, Investment Tax Credit, FEOC restrictions. One Big Beautiful Bill: 2025 Solar Tax Credit Update — What Businesses Need to Know


TLDR;

  • Key Takeaways Act by Dec 31, 2025: Lock in the full 30% ITC and avoid costly 2026 equipment restrictions.

  • Use the 5% Safe Harbor: A strategic financial commitment can secure your project’s eligibility now.

  • The Cost of Waiting is High: Delaying until 2026 could increase project costs by 15-25% due to new FEOC rules.

  • Align with ESG Goals: Solar projects advance Scope 2 emissions reductions for sustainability-focused businesses.


The solar Investment Tax Credit (ITC) has been a cornerstone for businesses investing in clean energy, and the passage of the "One Big Beautiful Bill," signed into law by President Trump on July 4, 2025, finally brings clarity to its future.


Following our updates on the House and Senate proposals from June 2025, this legislation marks a significant improvement over earlier drafts, which threatened an abrupt end to the ITC. While not perfect, the new law provides a workable timeline for securing the 30% ITC, giving manufacturers and other commercial businesses a clear path to plan their solar projects strategically. Here’s what you need to know to act decisively.


A More Manageable Timeline

The House and Senate proposals in June raised alarms with a potential December 31, 2025, deadline that would have left businesses scrambling.


The final legislation, detailed in our previous posts, offers a more reasonable framework, though it still phases out the ITC earlier than ideal. For businesses with high energy demands, such as manufacturers, retailers, or warehouse operators, this means you have a limited but actionable window to lock in the full 30% credit. Timing is everything, and understanding the nuances of this timeline will help you maximize your investment.



Your Window of Opportunity

The new law outlines three distinct phases for commercial solar projects, each with unique considerations:


  1. Now through December 31, 2025: This is the optimal period. Projects that begin construction by year-end secure the full 30% ITC, a four-year completion timeline (until 2029), and no restrictions on equipment sourcing. You’ll benefit from the broadest supplier options and today’s competitive pricing.


  2. January 1, 2026, to July 4, 2026: You can still claim the full 30% ITC and a four-year completion window, but new Foreign Entity of Concern (FEOC) restrictions apply, limiting components from countries like China, Russia, Iran, and North Korea. These rules may increase costs or extend lead times as suppliers adjust.


  3. After July 4, 2026: The window narrows significantly. Projects must be completed by December 31, 2027, under FEOC restrictions, creating a compressed timeline that heightens risk and likely raises costs due to limited equipment availability.


Starting by the end of 2025 is the clearest way to minimize complexity and maximize savings. Delaying could erode the financial benefits of your solar investment.


What Does “Beginning Construction” Mean?

To qualify for the ITC, the IRS requires you to “begin construction” in one of two ways:


  • 5% Safe Harbor: Commit at least 5% of the total project cost through expenses like equipment deposits, engineering, or other upfront costs.


  • Physical Work: Start significant on-site work, such as installing foundations or racking systems.


As we’ve noted in our guide on the 5% Safe Harbor strategy, this approach is often the most practical for commercial businesses. It allows you to secure ITC eligibility with strategic financial commitments, even before physical work begins.


The FEOC Challenge: Why 2025 Matters

Starting January 1, 2026, Foreign Entity of Concern (FEOC) restrictions will complicate equipment sourcing. Many solar panels, inverters, and battery systems currently rely on components from restricted countries, particularly China. While manufacturers are racing to develop FEOC-compliant supply chains, the transition will likely bring:


  • Cost increases of 15-25%.

  • Lead times extended by 3-6 months.

  • Fewer supplier options, limiting flexibility.


By launching your project in 2025, you avoid these hurdles, securing today’s pricing and availability.


The Cost of Waiting: A 1 MW Example

Consider a 1 MW rooftop solar system for your facility, priced at $2.50 per watt, for a total cost of $2.5 million. The 30% ITC would save you $750,000, and many projects may also qualify for an additional 10% Energy Community Credit, boosting savings further. If you start in 2025, you’ll enjoy readily available equipment, standard pricing, and multiple vendor options.


Delay until 2026, and FEOC-compliant equipment could add $375,000 to $625,000 to your costs, extend lead times, and reduce supplier choices. The savings lost by waiting could significantly diminish the economic case for your project.


*Actual project costs, savings, and timelines may vary significantly. Always consult qualified tax, legal, and financial advisors for guidance specific to your situation.


What Does This Mean for Your Business?

To understand how these changes impact your specific operations, consider the following industry-specific insights:


For Manufacturing Companies

Manufacturing facilities face a critical decision point. The new legislation means:


  • Immediate evaluation is essential: Even if you’re not ready to commit fully, starting feasibility studies now positions you to act quickly.


  • Supply chain planning is crucial: Understanding equipment options before FEOC restrictions hit could save significant costs.


  • ESG commitments remain achievable: The window for cost-effective solar implementation is narrowing, but acting now keeps your sustainability goals on track.


For Your Industry


Food & Beverage: Cold storage and processing facilities with high energy demands can lock in savings now, avoiding future cost increases that could impact thin margins.


Automotive & Parts: Securing renewable energy at today’s rates supports sustainability goals and operational efficiency, aligning with industry trends.


Warehousing & Distribution: Large roof spaces make these facilities ideal for solar, but FEOC restrictions could limit panel options and raise costs after 2025.


A Strategic Plan for Commercial Businesses

At Innovate Energy Group (IEG), we’re actively working with manufacturers and other businesses, such as retailers and warehouse operators, to evaluate solar projects on an expedited timeline. Our goal is to ensure they’re well-positioned to secure the ITC before the 2025 deadline.


Many of our clients are assessing sites and gathering data to make informed decisions. We’re helping them approve projects and leverage the 5% Safe Harbor strategy to lock in the 30% ITC, with most also eligible for the 10% Energy Community Credit.


For businesses with ESG commitments tied to Scope 2 emissions reductions or renewable energy goals, acting now is critical. Solar projects can significantly advance these objectives while delivering financial benefits.


Here’s a tailored three-tiered approach to guide your next steps:


  • Act by December 31, 2025: Focus on evaluating potential sites and determining which projects to prioritize. This is ideal for businesses actively assessing solar opportunities, even if final approvals are still in progress. Work with experts to conduct feasibility studies and prepare to secure ITC eligibility through the 5% Safe Harbor. This ensures maximum savings and flexibility, aligning with ESG goals for renewable energy adoption.


  • Act by July 4, 2026: A solid option for those needing more time to finalize site selections or internal approvals. Begin feasibility studies now and start vetting FEOC-compliant suppliers to mitigate future risks. This keeps ITC benefits within reach, though with added complexity.


  • Act after July 4, 2026: Only pursue this if unavoidable constraints prevent earlier action. Prepare for higher costs, tighter timelines, and FEOC restrictions that could limit your options.


No matter where you are in the process, you’re not behind. With the right support, you can move quickly to capitalize on this opportunity.


How to Get Started

  1. Assess facilities for solar-ready sites.

  2. Engage experts for feasibility studies.

  3. Connect with FEOC-compliant suppliers.

  4. Use the 5% Safe Harbor to lock in ITC eligibility.


Our team at IEG has guided businesses nationwide through the ITC landscape.


We offer:

  • Pre-vetted suppliers for reliable equipment sourcing.

  • Proven strategies to meet IRS requirements.

  • Expertise in combining ITC benefits with incentives like USDA REAP grants and the Energy Community Credit.




Frequently Asked Questions


Q: What happens if we start a project in 2025 but can’t complete it until 2030?

A: Projects beginning construction by December 31, 2025, have until the end of 2029 to be placed in service under the standard 4-year safe harbor rules. This provides ample time for even complex installations.


Q: How do we know if our preferred equipment will meet FEOC requirements?

A:This is evolving rapidly. We’re maintaining a database of FEOC-compliant suppliers and can help you navigate these requirements. Starting in 2025 eliminates this concern entirely.


Q: Can we combine the ITC with other incentives?

A: Yes! Many projects qualify for additional benefits like the 10% Energy Community Credit, USDA REAP grants, and accelerated depreciation. We help clients stack these incentives for maximum return.


Q: What if our board needs more time for approval?

A: The 5% Safe Harbor strategy allows you to secure ITC eligibility with relatively modest upfront commitments while finalizing internal approvals. We can structure agreements to accommodate your approval process.


Q: How long does a typical commercial solar project take from start to finish?

A: Most projects require 6-12 months from initial planning to energization. Starting now ensures you have adequate time before any deadline pressures.


Seize the Moment

The "One Big Beautiful Bill" provides a clearer roadmap than the earlier House and Senate proposals, but the ITC’s phase-out means businesses must act strategically to secure its full benefits. By starting in 2025, you’ll maximize savings, sidestep FEOC complexities, and advance your ESG commitments through renewable energy.


Businesses across industries, from manufacturing to retail and warehousing, can use solar to meet Scope 2 emissions goals and appeal to sustainability-focused stakeholders.


Ready to take action? Visit www.ieg.solutions to request a complimentary solar assessment from our team at Innovate Energy Group. We’ll analyze your facilities and develop a customized plan to secure the ITC and drive your clean energy strategy forward. Act now to lock in the best terms for your solar investment.




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Disclaimer: This article is for informational purposes only and does not constitute tax or legal advice. Consult qualified professionals for guidance specific to your situation.



 
 
 

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