The “Final Year” for Bonus Depreciation? Maximizing Your Solar Tax Strategy in 2026
If you own a business in Oregon or Washington, you likely view a solar installation as a way to cut overhead costs and lock in predictable energy rates. You aren’t wrong—but in 2026, the tax strategy is more urgent than ever.
For savvy business owners, solar isn’t just an energy upgrade; it is a powerful financial lever.
At Sunbridge Solar, we have spent over 15 years helping PNW businesses navigate the complex world of solar finance. While the 30% Federal Investment Tax Credit (ITC) provides a strong baseline, the ability to accelerate your ROI through MACRS and Bonus Depreciation is facing a critical deadline.
2026 is shaping up to be the final year to capture specific depreciation benefits before they expire. Here is your plain-English guide to maximizing your commercial solar tax benefits this year.
What is Solar MACRS?
MACRS stands for Modified Accelerated Cost Recovery System.
In simple terms, it is the method the IRS uses to determine how fast you can write off the value of a business asset. While most commercial buildings are depreciated over a long 39-year timeline, qualifying solar energy equipment is classified as 5-year property.
This means you don’t have to wait decades to recover your investment. You can write off the depreciable basis of your solar system entirely over a five-year schedule. This accelerates your tax savings, keeping more cash in your business when you need it most—now.
The 2026 Urgency: Capture the Last of “Bonus Depreciation”
Here is why 2026 is a pivotal year for decision-making.
For years, businesses enjoyed high “Bonus Depreciation” rates, allowing them to write off large portions of the system cost in Year 1. However, under the Tax Cuts and Jobs Act, this benefit has been phasing out and is now nearing zero.
- 2024: 60% Bonus Depreciation
- 2025: 40% Bonus Depreciation
- 2026: 20% Bonus Depreciation (Current Year)
- 2027: 0% Bonus Depreciation (Projected)
The takeaway: Unless Congress acts, 2026 is the final year to claim any Bonus Depreciation. If you place your system in service before the end of 2026, you lock in the 20% bonus rate. Waiting until 2027 means relying solely on the slower, standard MACRS schedule.
The Cost of Waiting: 2026 vs. 2027
To visualize why acting this year matters, let’s look at the financial impact on a hypothetical $100,000 project.
By installing in 2026, you secure a larger upfront deduction compared to waiting just one year.
| Financial Metric | Install in 2026 (20% Bonus) | Install in 2027 (0% Bonus) |
| System Cost | $100,000 | $100,000 |
| 30% Tax Credit (ITC) | $30,000 | $30,000 |
| Depreciable Basis* | $85,000 | $85,000 |
| Bonus Depreciation Claimed | $17,000 (20%) | $0 (0%) |
| Standard MACRS (Year 1) | $13,600 | $17,000 |
| Total Year 1 Tax Deduction | $30,600 | $17,000 |
| Value of Deduction (@ 21% Tax Rate) | ~$6,426 | ~$3,570 |
*The Depreciable Basis is calculated as Cost minus half the ITC value ($100k – $15k = $85k).
The Bottom Line: By waiting until 2027, you lose nearly $13,600 in first-year deductions, slowing down your ROI and keeping that cash tied up in taxes rather than your business.
The “Solar Tax Stack”: How It Works in Practice
The magic happens when you stack federal incentives with our specific regional benefits in Oregon and Washington. Let’s walk through the full calculation for a 2026 installation.
Step 1: The Federal Investment Tax Credit (ITC)
First, you claim the 30% ITC. This is a dollar-for-dollar reduction of your tax liability.
- Credit: $30,000
Step 2: Calculate the Depreciable Basis
The IRS requires you to reduce the basis of the asset by half of the ITC value before depreciating it.
- Depreciable Basis: $100,000 – ($30,000 / 2) = $85,000
Step 3: Apply Depreciation (2026 Rates)
If you install in 2026, you can claim 20% Bonus Depreciation on that $85,000 immediately.
- Year 1 Bonus Write-off: $17,000
You then depreciate the remaining balance ($68,000) using the standard 5-year MACRS schedule (Year 1 is 20%).
- Year 1 Standard MACRS: $68,000 × 20% = $13,600
Total Year 1 Deduction: $17,000 + $13,600 = $30,600
The Result
Between the 30% tax credit ($30,000) and the cash value of your depreciation deductions (~$6,426), you have effectively recovered over 36% of your project cost in the first year.
(Note: This is a simplified example. Always consult your CPA to understand your specific solar business tax advantages.)
Frequently Asked Questions (FAQ)
We know commercial solar finance can be complex. Here are the most common questions our commercial clients ask.
What if I don’t have enough tax liability to use the credit this year?
This is a common scenario. The good news is that the Investment Tax Credit (ITC) can generally be carried back 3 years or carried forward for up to 22 years. If you can’t use the full $30,000 credit in 2026, you simply bank it for future tax years. Depreciation losses can also typically be carried forward as a Net Operating Loss (NOL).
Does this apply to battery backup systems?
Yes. Under the Inflation Reduction Act, standalone energy storage systems (batteries) with a capacity of at least 5 kWh are eligible for the 30% ITC and MACRS depreciation, even if they are not charged 100% by solar. This is huge for businesses looking for energy resilience.
What happens if I sell my building?
If you sell the property within 5 years of placing the solar system in service, you may be subject to “recapture” rules. The IRS will “claw back” a portion of the ITC (20% for each full year early that you sell). However, standard depreciation recapture may also apply. Many business owners choose to include the solar system value in the building sale price to offset this.
Can I depreciate a new roof if I install solar on it?
Generally, no. The roof itself is considered a structural component of the building and is depreciated over 39 years. However, the solar equipment on top of the roof remains 5-year MACRS property. There are some gray areas regarding “improvements” necessary for the solar installation, so this is a critical question for your CPA.
State-Specific Incentives: The Cherry on Top
The Pacific Northwest offers unique advantages that further sweeten the deal.
For Oregon Businesses
In addition to federal write-offs, MACRS solar depreciation in Oregon is often complemented by cash incentives from the Energy Trust of Oregon.
- Trust Matters: As an Energy Trust of Oregon Trade Ally, Sunbridge Solar helps you qualify for these competitive cash incentives, which can directly offset your upfront costs.
- Top-Rated Quality: Our installations are verified by the Energy Trust, ensuring your system performs exactly as promised.
For Washington Businesses
Washington offers one of the most powerful incentives in the country: the Solar Sales Tax Exemption.
- 100% Exemption: For solar energy systems up to 100kW (which covers most small-to-medium businesses), you pay 0% sales tax on the equipment and installation.
- Immediate Savings: This instantly saves you roughly 10% on the project cost right out of the gate, maximizing your ROI before you even file your federal taxes.
Checklist: How to File for Your Solar Tax Benefits
While Sunbridge Solar handles the permitting and installation, your tax professional will handle the filing. Here is a checklist to hand to your CPA to ensure you don’t miss a beat.
- Proof of “Placed in Service”: Ensure you have documentation (PTO letter from utility) showing the system was active on or before December 31, 2026.
- IRS Form 3468 (Investment Credit): This is used to claim the 30% Federal ITC.
- IRS Form 4562 (Depreciation and Amortization): This is used to report the MACRS and Bonus Depreciation deductions.
- State Forms (WA only): Ensure your invoice clearly separates qualifying solar equipment to validate the sales tax exemption (we handle this on our end!).
Why Partner with Sunbridge Solar?
Navigating commercial solar tax benefits in the PNW requires a partner who understands both the technology and the policy.
- 15+ Years of Experience: We are locally owned and have been serving Oregon and Washington businesses for over a decade.
- Turnkey Solutions: We handle the permitting, the utility paperwork, and the incentive applications so you can focus on running your business.
- Unmatched Warranty: We stand behind our work with a 10-year craftsmanship warranty and install products with 25-year manufacturer warranties.
Stop Overpaying on Taxes. Start Generating Power.
The window to maximize your solar tax write-offs is closing fast. With Bonus Depreciation likely hitting 0% in 2027, the smartest time to invest in your business’s energy future is right now.
Don’t leave money on the table.Call us at 360-313-7190 to schedule your free, no-obligation consultation. Let’s build a custom energy solution that works for your bottom line.
