For commercial and third-party-owned solar. See your year-by-year depreciation deduction under 5-year MACRS, with the required ITC basis reduction applied automatically.
Depreciable basis = system cost − (0.5 × ITC dollar amount). This is a fixed IRS rule, not a planning choice.
| Year | MACRS % | Depreciation deduction | Est. tax value |
|---|---|---|---|
| Total | 100% |
Solar energy property placed in service for business use qualifies as 5-year property under the IRS's General Depreciation System, using 200% declining-balance depreciation that switches to straight-line partway through — the standard published percentages are 20%, 32%, 19.2%, 11.52%, 11.52%, and 5.76% across six tax years (the half-year convention spreads the first and last year's deduction across a partial year regardless of your actual placed-in-service date).
If you claim the Section 48E investment tax credit, IRS rules require you to reduce your depreciable basis by half of the ITC dollar amount before applying the MACRS schedule. At the 2026 base rate of 30%, that means depreciating 85% of your system cost (100% minus half of 30%), not the full amount — a detail that's easy to miss and changes every year's deduction.
The One Big Beautiful Bill Act, signed July 2025, ended the residential Section 25D credit entirely as of January 1, 2026 — homeowners who own their system outright get no federal credit and can't use this calculator's ITC-linked basis reduction (they also can't depreciate a personal-use asset at all). The commercial Section 48E credit is still active for projects meeting construction-start and placed-in-service deadlines, but now carries added Foreign Entity of Concern (FEOC) sourcing requirements that didn't exist before. MACRS itself wasn't changed by the law — it remains available to any qualifying commercial or third-party-owned system.
Solar energy property is 5-year MACRS property under the General Depreciation System, using 200% declining balance switching to straight-line, with the half-year convention in most cases (the mid-quarter convention applies instead if more than 40% of your year's qualifying assets were placed in service in the final quarter).
IRS rules require reducing the depreciable basis by half of any Section 48E investment tax credit claimed. If you claim a 30% ITC, your depreciable basis is the system cost minus 15% (half of 30%), not the full system cost.
Yes. MACRS depreciation for solar is a long-standing part of the tax code and was not eliminated by the One Big Beautiful Bill Act. The Section 48E investment tax credit that reduces your depreciable basis is currently available for commercial solar projects meeting placed-in-service and construction-start deadlines under 2025-2026 law.
No. MACRS depreciation is a business tax benefit for solar used in a trade or business, or for third-party-owned systems under leases and PPAs. Homeowners who own their system outright cannot depreciate it on a personal return.
This tool estimates federal MACRS depreciation using published IRS percentage tables and the standard ITC basis-reduction rule. It is not tax advice — state depreciation rules, bonus depreciation elections, mid-quarter convention triggers, and your specific facts can all change the real numbers. Work with a CPA before filing.