The One Big Beautiful Bill Act was signed into law on July 4, 2025, and it made significant changes to the tax incentives that make commercial and agricultural solar financially compelling. Some changes are very good news. Some create new urgency. All of them are worth understanding before you make a decision.
Here's what changed and what it means in plain terms.
100% Bonus Depreciation Is Back — Permanently
Under the 2017 Tax Cuts and Jobs Act, businesses could deduct 100% of the cost of qualifying equipment in the first year. That benefit was always scheduled to phase out — dropping to 80%, then 60%, 40%, 20%, and eventually zero by 2027.
The OBBBA reversed that phase-down entirely. 100% first-year bonus depreciation is now a permanent feature of the tax code with no scheduled sunset. Solar equipment placed in service after January 19, 2025 qualifies.
For a business or farm that installs a solar system, this means you can write off the depreciable value of the entire system in year one — on top of claiming the 30% Investment Tax Credit. Those two benefits stack.
How the Stacking Works
Here's a simplified example using a $500,000 commercial system:
- 30% ITC: $150,000 direct credit against your tax bill
- Depreciable basis: $500,000 minus 50% of the ITC = $425,000
- 100% bonus depreciation: $425,000 deduction in year one
- Tax savings from depreciation (at 35% effective rate): ~$149,000
- Combined year-one recovery: approximately $299,000 — nearly 60% of the total project cost
The IRS basis reduction rule (you reduce the depreciable basis by 50% of the ITC claimed) has been in place for years. The change is that the depreciation percentage on that remaining basis is now 100% permanently, instead of declining to zero.
The ITC Still Requires You to Start Construction
The 30% Investment Tax Credit — formally now under Section 48E of the tax code — remains available for commercial and agricultural solar. But the OBBBA added a critical deadline.
To qualify for the ITC, construction on your project must begin before July 4, 2026.
Projects that start construction after that date must be placed in service by December 31, 2027 to qualify at all. For most commercial and agricultural installations, which are completed in a matter of weeks to a few months, that placed-in-service deadline is the more relevant number.
But permitting, engineering, equipment procurement, and utility coordination all take time. If you're considering a commercial or agricultural solar system and want to capture the full ITC, now is a reasonable time to start the conversation.
Bonus Depreciation Has No Equivalent Deadline
Here's the good news on the other side: bonus depreciation has no construction-start deadline. Any solar system placed in service after January 19, 2025, qualifies — regardless of when you start construction. The urgency is specifically around the ITC.
What This Means for Farms and Businesses in ND and MN
Agricultural operations and commercial businesses in North Dakota and Minnesota qualify for both the 30% ITC and 100% bonus depreciation under the same rules as businesses in any other state. For most systems under 1 MW — which covers the vast majority of commercial and farm installations — there's no prevailing wage or apprenticeship requirement to receive the full 30% credit.
State tax conformity matters too. North Dakota and Minnesota may handle bonus depreciation differently at the state level. We always recommend confirming the full picture with your accountant before finalizing your decision.
The Bottom Line
The combination of a permanent 100% bonus depreciation and a 30% ITC that's still available (with a deadline) creates one of the strongest financial cases for commercial solar we've seen in years. For the right project, nearly 60 cents of every dollar invested can come back in year-one tax benefits.
If you want to put actual numbers to a system sized for your facility or operation, we can put together a detailed financial summary for your accountant to review.
Ready to run the numbers? Get a free consultation — we'll put together the financials in a format your CPA can work with.