Accelerated 5-year depreciation for commercial solar energy systems.
The Modified Accelerated Cost Recovery System (MACRS) allows commercial solar system owners to depreciate the full cost of their system over just 5 years — significantly faster than the system's 25+ year useful life. Combined with bonus depreciation, businesses can deduct a substantial portion of the system cost in the first year.
Depreciate 85% of system cost (after 50% ITC basis reduction) over 5 years using the MACRS schedule: 20%, 32%, 19.2%, 11.52%, 11.52%, 5.76%.
First-year bonus depreciation allows immediate deduction of a significant percentage of the depreciable basis — accelerating tax savings.
MACRS and the 30% commercial ITC work together. The depreciable basis is reduced by 50% of the ITC claimed, and the remaining basis is depreciated over 5 years. To qualify for the ITC that makes MACRS so valuable, your project must begin construction before July 4, 2026 — with actual physical work on-site, not just deposits.
On a $200K commercial system: 30% commercial ITC = $60K credit, plus MACRS depreciation on $170K basis creates additional tax savings of $40-50K+ depending on tax bracket.