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INCENTIVES & POLICY

The Commercial Solar Tax Credit 2027 Deadline: What Southern California Owners Need to Know Now

October 15, 2026 · Burge Energy · 6 min read

The federal commercial solar tax credit now runs on a fixed clock. Under the 2025 budget law, solar projects that did not begin construction by July 4, 2026 must be placed in service by December 31, 2027 to claim the Section 48E credit. As of October 15, 2026, that leaves roughly 14 months. For Southern California owners weighing a commercial solar tax credit 2027 timeline, the question is no longer whether to plan around the deadline, but whether a project can finish in time.

This post explains what the law says, what Treasury, the IRS, and a federal court have done so far, and what to gather now if a project is on the table.

The commercial solar tax credit 2027 deadline: what changed

The One Big Beautiful Bill Act (Public Law 119-21) was approved on July 4, 2025. It is enacted law, not a proposal. It added a termination rule to Section 48E stating the credit does not apply to qualified property that is part of a wind or solar facility placed in service after December 31, 2027. Per the statutory notes on that page, the cutoff applies to facilities whose construction begins more than 12 months after July 4, 2025.

In plain terms, a solar project that began construction by July 4, 2026 is not subject to the 2027 cutoff, though it still must satisfy the IRS continuity requirement. A project that did not begin construction by July 4, 2026 must be placed in service by December 31, 2027 to qualify. Miss that date without an earlier start, and there is no Section 48E credit for the solar facility.

The July 4, 2026 construction start date has now passed, so for most new commercial solar conversations in Orange County today, the placed-in-service date is the one that matters.

The credit itself is unchanged in structure. The IRS lists a base rate of 6 percent of the qualified investment, rising to as much as 30 percent for projects that meet prevailing wage and registered apprenticeship requirements. The same page describes possible 10 percentage point increases for qualifying domestic content and for projects in an energy community.

How "beginning of construction" is measured after the court ruling

On August 15, 2025, the IRS released Notice 2025-42, which tightened how wind and solar projects show construction has started. It applied to facilities that had not begun construction before September 2, 2025. The notice made the physical work test the main method and limited the older 5 percent cost safe harbor to solar facilities with a maximum net output of 1.5 MW (AC) or less.

That notice no longer stands. On June 6, 2026, the U.S. District Court for the District of Columbia, in Oregon Environmental Council v. Internal Revenue Service, vacated Notice 2025-42 in full and remanded it to the IRS. According to EY's summary of the ruling, the court found the IRS acted arbitrarily in eliminating the 5 percent safe harbor, so taxpayers may again use either the physical work test or the 5 percent safe harbor under earlier guidance, and the continuity requirement still applies.

The ruling did not change the statute. The July 4, 2026 start date and the December 31, 2027 placed-in-service date both come from Public Law 119-21. A September 4, 2026 Clifford Chance briefing reported that no notice of appeal had been filed as of that date. The IRS could still issue revised guidance.

Because the start date has passed, these rules now matter mainly to projects that believe they started on time and want to document it. Owners relying on an earlier start may want a tax advisor to review the evidence.

Battery storage and EV charging follow different rules

Storage is not tied to the solar cutoff. The 2027 termination in Section 48E is written for wind and solar facilities, and the statute carves out energy storage technology from that rule. Storage instead follows the general 48E phase-out, which the IRS describes as tied to the later of 2032 or when national electricity emissions fall to 25 percent of 2022 levels. That makes stand-alone or added battery storage a separate planning track from rooftop or carport solar.

EV charging is different again. The Section 30C alternative fuel refueling property credit, which covered commercial chargers, does not apply to property placed in service after June 30, 2026. The 2025 law moved that date up from December 31, 2032. Chargers placed in service today do not qualify for that federal credit, which leaves state and utility programs as the main avenues to review (see our Incentives page).

The foreign entity rules now apply to new projects

The 2025 law also added restrictions on "material assistance" from a prohibited foreign entity (often called FEOC rules). Under Section 48E, facilities and storage whose construction begins after December 31, 2025 are not eligible if they include such material assistance. For a project starting in 2026, that means equipment sourcing is part of eligibility, not just cost.

Treasury and the IRS issued Notice 2026-15 on February 12, 2026 as interim guidance and said they intend to propose regulations on the definition of a prohibited foreign entity and on the material assistance cost ratio. A law firm summary of the notice reports that for construction beginning in 2026, the threshold percentage is 40 percent for a qualified facility and 55 percent for energy storage, rising each year through 2029. Taxpayers may generally rely on supplier certifications unless they know or have reason to know a certification is inaccurate. Per the IRS, the notice's rules for calculating the cost ratio may be relied on until 60 days after forthcoming safe harbor tables are published.

Notice 2026-15 remains the operative guidance. In the 2026-2027 Priority Guidance Plan released September 29, 2026, Treasury and the IRS still list prohibited foreign entity and material assistance guidance as a planned project.

What this means for your project

A 14 month window is workable for many commercial rooftop and carport systems, but only if design, permitting, procurement, and utility interconnection move in parallel. The placed-in-service date is the test, not the order date or the start of installation. Your tax advisor can confirm what placed in service means for your facts.

Documents and questions worth gathering now:

  • Recent utility bills and interval data for each meter, plus any planned load growth (EV fleets, new buildings, electrification).
  • Roof age, structural drawings, and parking layouts for carport options.
  • A schedule that shows permit, utility interconnection approval, and equipment delivery dates, with float before December 31, 2027.
  • Supplier certifications covering prohibited foreign entity content for modules, inverters, racking, and batteries.
  • Whether the project can meet prevailing wage and apprenticeship requirements, and how that will be documented.
  • For any project you believe started by July 4, 2026: records of physical work of a significant nature or of costs paid or incurred.
  • Questions for your contractor: What is the realistic utility interconnection timeline at this site? Which equipment is in stock today with certifications? What happens to the schedule if a component is delayed?

Storage and EV charging decisions can be made on their own tracks. You can read more about how we approach these systems on our Burge Energy page.

Incentive eligibility depends on project specifics. Confirm with your tax advisor and the program administrator before relying on any figure here.

How Burge Energy can help

Burge Energy, part of the family-owned company Dan Burge founded in 1977, designs and builds commercial solar, battery storage, and EV charging across Orange County and Southern California, for new builds and existing properties. We help owners screen incentives, build a realistic schedule against the 2027 deadline, and coordinate design, permitting, procurement, and utility interconnection with your advisors. Request an Energy Assessment.

Sources

This article is general information, not legal, tax or financial advice. Facts are current as of October 15, 2026; rules and programs can change.

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