Commercial Solar 2026: Maryland and DC Businesses Have a July ITC Deadline

The 30% federal residential solar credit ended for homeowners on January 1, 2026. The commercial credit (Section 48E) did not. For Maryland and DC businesses, 2026 is a shrinking but still powerful window to capture both the 30% federal Investment Tax Credit and 100% first-year bonus depreciation. The deciding factor is when construction begins.

The Section 48E phase-out timeline

Under the One Big Beautiful Bill Act, signed July 4, 2025, the commercial solar ITC retained its full 30% rate but added a placed-in-service cliff for projects that start construction later in the cycle.

The 30% rate itself does not step down based on construction-start date. There is no 26% or 22% phase rate like the original IRA structure had. Only the placed-in-service window tightens. For projects starting after July 5, 2026, you have roughly 18 months to design, permit, install, commission, and energize. That is very compressed for anything beyond a straightforward rooftop install.

What "begin construction" actually means

IRS Notice 2025-42 clarifies what counts as beginning construction for Section 48E purposes. The 5% safe harbor (spending 5% of total project cost before the deadline) closed for most projects starting after September 1, 2025. After that date, only the Physical Work Test establishes the begin-construction date: meaningful construction activities tied directly to the energy property, not preliminary design or site prep. A narrow exception extended the 5% safe harbor for low-output solar (1.5 MW AC and under) through December 31, 2025. After that, the Physical Work Test is the only path for most commercial projects.

Prevailing wage and apprenticeship

Projects 1 MW AC and above must meet prevailing wage and apprenticeship requirements to qualify for the full 30% rate. Below that threshold, the requirements do not apply. Most rooftop commercial projects under roughly 700 kW DC fall below this AC threshold and do not trigger the requirements.

100% bonus depreciation is back

OBBBA reinstated 100% first-year bonus depreciation for commercial solar equipment placed in service between 2025 and 2029. Combined with the 30% ITC, the year-one tax math improves substantially for businesses that can use depreciation against taxable income.

Here is the order of operations:

1. Claim the 30% federal ITC on total system cost.
2. Reduce the depreciable basis by half the ITC (15% of cost). This is the IRS Section 50(c)(3) basis reduction rule, still applicable under OBBBA.
3. Apply 100% bonus depreciation to the remaining 85% of cost in year one.

100 kW system math: a Maryland example

For a 100 kW commercial rooftop system on a Maryland building, total installed cost typically runs $185,000 to $220,000 depending on roof complexity, equipment selection, electrical work, and interconnection requirements. We use $200,000 as the midpoint for this illustration. Your actual quote will vary.

The 21% rate is the federal corporate income tax. A Maryland-headquartered business pays an additional 8.25% Maryland corporate tax, raising the combined effective rate to approximately 27%. At 27%, the depreciation tax value rises to roughly $45,900, putting year-one effective cost closer to $94,100 instead of $104,300. The federal-only number is conservative. An MD-based business typically captures more depreciation value than the table shows.

Annual returns: energy savings plus SRECs

Once the system is producing, two cash flows hit the bottom line every year: utility bill displacement and SREC income. The assumptions behind the next table:

• Production: a well-sited Maryland commercial rooftop produces 1,200 to 1,300 kWh per kW installed annually. For a 100 kW system, that is 120,000 to 130,000 kWh per year. We use 1,200 kWh/kW (120,000 kWh) as the conservative midpoint.
• Electricity rate: commercial blended rates vary by utility and tariff class. BGE commercial customers typically see $0.15 to $0.16 per kWh; Pepco commercial often $0.12 to $0.13. We use $0.14 as a midpoint.
• SREC value: Certified SRECs from commercial rooftop and canopy systems installed between July 2024 and January 2028 receive a 1.5x multiplier under Maryland's Brighter Tomorrow Act, producing effective values of $60 to $90 per certificate. We use $70 as a conservative midpoint.

After payback, the system continues to generate $25,200 or more per year for the remainder of its useful life. Over a 25-year horizon, that is more than $500,000 in cumulative savings and SREC income on a $200,000 investment, before accounting for utility rate escalation. A Maryland-headquartered business using the 27% combined tax rate hits payback closer to 3.8 years.

State incentive stacks

Maryland

• Certified SRECs: $60-$90 per certificate post-multiplier for qualifying rooftop and canopy systems through January 2028.
• Property tax exemption: 100%. Solar equipment value is excluded from commercial property assessments.
• Sales tax exemption: Maryland's 6% sales tax is waived on solar equipment. Installation labor is not exempt.

Washington DC

• DC SRECs: roughly $400 to $415 each thanks to the District's 100% renewable mandate by 2032. A 100 kW commercial system can generate $50,000 or more in annual SREC income alone in DC, often paying back system costs within 3 to 4 years.
• Property tax exemption: solar equipment value excluded from commercial property assessments.

Benefits beyond the year-one tax math

• Locked-in energy costs. Shield against utility rate increases of 3 to 5% per year for 25 years.
• Brand reputation. A visible sustainability commitment resonates with customers, tenants, and employees.
• Tenant attraction. Solar-equipped commercial buildings can command higher rents in markets where ESG criteria matter to tenants.
• ESG and reporting compliance. Meet growing Environmental, Social, and Governance reporting requirements with on-site renewable generation.

The bottom line for Maryland and DC business owners

The combination of the full 30% ITC, 100% bonus depreciation, the Maryland SREC stack with the Brighter Tomorrow multiplier, and tightening completion windows means 2026 is one of the stronger commercial solar windows we have seen in years. Projects that begin construction before July 5, 2026 have a 4-year window to complete. Projects that start later must close by December 31, 2027.

Engineering and permitting typically take 6 to 12 weeks. Equipment procurement and delivery add 4 to 8 weeks. For projects targeting the July 5 deadline, that means making the procurement decision and breaking ground by late spring or early summer 2026.

Aduu Solar has completed commercial installations from small office systems to nearly 800 kW across Maryland and DC. Our commercial team handles energy audits, system design, permitting, installation, and SREC registration end-to-end.