The 4 July begin-construction deadline has passed. What that means for commercial projects.
Projects that began construction after 4 July 2026 face a hard placed-in-service date of 31 December 2027. Two safe harbours decide which side of the line you are on.
§48E(e)(4) accelerates termination of the credit for wind and solar facilities whose construction begins after 4 July 2026. Projects that started before that date follow the ordinary rules. Projects that started after it must be placed in service by 31 December 2027 to claim the credit at all.
So the question for any commercial project in the pipeline is narrow and consequential: did construction "begin" before 4 July 2026, and can you prove it?
The two tests
Under IRS Notice 2025-42, Treasury set out what beginning construction means. Taxpayers may rely on either:
- The Physical Work Test — physical work of a significant nature has started. This is about the nature of the work, not the amount spent.
- The Five Percent Safe Harbor — at least 5% of total project cost has been paid or incurred.
Both then require continuous progress. Treasury offers a continuity safe harbour: a facility placed in service within four calendar years of the year construction began is deemed to satisfy it.
The part that catches people
Excusable disruptions — severe weather, permitting delays, supply chain problems — do not extend that four-year window. They can be argued under a facts-and-circumstances test if the safe harbour is missed, but at that point the burden of proof sits with the taxpayer rather than being presumed. A project relying on "we were delayed for good reasons" is in a materially weaker position than one inside the safe harbour.
Why this is on a residential calculator's site
Because the residential market now runs substantially on third-party ownership, and third-party owners are commercial taxpayers claiming §48E. When their credit gets harder to claim, that shows up in PPA pricing offered to households. The two markets are no longer separable, which is exactly why §25D's expiry and §48E's deadlines belong on the same page.
Sources
- IRS Notice 2025-42 — beginning of construction guidance
- The Tax Adviser — navigating safe-harbor rules for §48E facilities
Run the numbers under these rules
The calculator already models the position described above — no federal residential credit on a purchased system, §48E in the hands of a third-party owner, and hourly settlement against your tariff's own export rule.
More policy
- The 30% residential solar credit is gone. What replaced it is not a credit.Net billing is the default now, and it changes what a solar panel is for