About this revision
We first published this piece on June 15, 2026 as a pre-deadline explainer. July 4, 2026 has now passed, so we rewrote it on October 10, 2026 to explain how the rules apply to projects today. It is general information, not tax advice — confirm any project’s eligibility with your tax advisor.
The short version
July 4, 2026 did not switch off every commercial clean-energy credit. It split solar projects into two groups under the Section 48E (investment) and 45Y (production) credits:
- Construction began on or before July 4, 2026. These projects are not subject to the new December 31, 2027 placed-in-service cutoff. They still have to show that construction genuinely began under IRS rules and that work continued; the IRS continuity safe harbor is met if the project is placed in service by the end of the fourth calendar year after the year construction began.
- Construction begins after July 4, 2026. The project must be placed in service by December 31, 2027 to qualify. After that date, the credit terminates for these solar facilities.
That is the rule as described in IRS Notice 2025-42, which implements the changes made by Public Law 119-21 (the 2025 budget law often called the One Big Beautiful Bill Act).
“Began construction” has a specific meaning
For solar facilities whose construction did not begin before September 2, 2025, Notice 2025-42 makes the Physical Work Test the only way to establish a construction start — meaning physical work of a significant nature, on site or off site under a binding written contract. Planning, permitting and financing do not count. The older Five Percent Safe Harbor remains available only for low-output solar facilities of 1.5 MW or less.
If you believe your project began construction on or before July 4, 2026, the practical task now is documentation: binding contracts, dated evidence of physical work, and a schedule showing continuous progress toward placing the system in service.
The 30% rate is not automatic
The IRS describes the Section 48E base credit as 6% of the qualified investment, increased up to 30% for facilities that meet prevailing-wage and registered-apprenticeship requirements; the statute also provides exceptions, including for facilities under 1 MW. Bonus amounts (for example, domestic content or energy communities) have their own requirements. And for projects that begin construction after December 31, 2025, new prohibited-foreign-entity (“material assistance”) restrictions apply; the IRS issued initial guidance in Notice 2026-15 in February 2026.
So a credit percentage should come out of a project-specific eligibility review, not be assumed in a spreadsheet. A missing review is not a finding that a project is ineligible either.
Energy storage is treated differently
Notice 2025-42 excludes energy storage technology from the wind and solar facility definitions it applies to, so storage is not subject to the July 2026 / December 2027 solar termination rule. Storage still has to meet the other Section 48E requirements, including wage and apprenticeship rules and the foreign-entity restrictions. In a paired solar-plus-storage project, the solar and storage portions should be assessed separately.
EV charging
The IRS states that the Section 30C credit for alternative fuel vehicle refueling property (which covers EV chargers) does not apply to property placed in service after June 30, 2026.
What to do if you are deciding now
- Establish the facts for any earlier start. If contracts were signed or work began before July 4, 2026, assemble the evidence and have your tax advisor assess it.
- For a new solar project, test the schedule. Placing a system in service by December 31, 2027 depends on design, permitting, equipment lead times and utility interconnection. Plan with realistic dates, and model the project both with and without the credit.
- Assess storage on its own terms. Demand-charge reduction and the separate storage credit rules may make storage worth evaluating even where the solar credit is uncertain.
- Get the eligibility review early. Credit rate, sourcing rules and ownership structure all affect the result.
A project that only works because of a credit it may not receive is not a good project. We model the economics on your actual tariff and interval data and show which results depend on tax assumptions.
Sources
- IRS Notice 2025-42 (Internal Revenue Bulletin 2025-36): beginning-of-construction rules and the post-July 4, 2026 termination for wind and solar facilities.
- IRS: Clean Electricity Investment Credit (Section 48E): base and increased credit rates.
- IRS IR-2026-23 (Notice 2026-15): material-assistance (prohibited foreign entity) guidance.
- IRS FS-2025-05 FAQs: Section 30C and Section 25D termination dates.
Last reviewed October 10, 2026. Tax rules and IRS guidance change; this article is not tax advice.