Updated: 10.6.2025
On 4 July 2025 the One Big Beautiful Bill (OBBB) accelerated the wind down of solar energy income tax credits (ITC).
Smart deployment of safe harbor rules allows for maximum commercial taxpayer tax credit benefits. Close coordination with your tax advisor, solar contractor, and equipment suppliers is necessary, especially in light of new “continuous construction” definitions expected from the IRS in August 2025.
Learn more below, or you can view our handy solar safe harbor infographic flowchart to determine how the new rules apply to your project.
Safe harbor is the minimum level of project commitment required to demonstrate to the IRS that construction has formally commenced and will reasonably continue to completion to secure the tax benefits during the year construction began.
To meet safe harbor, projects must pass one of the following tests:
Projects less than 1.5MW (AC) may qualify under either:
Projects 1.5MW (AC) and larger – Must use Physical Work Test only. New IRS guidance removes the 5% Safe Harbor option for larger projects starting construction after September 2, 2025.
The OBBB published two deadlines for safe harboring the tax credit and bonus credits:
If your solar project has not achieved safe harbor, StraightUp Solar will work with you to develop your customized strategy to maximize the return from your investment.
We recommend 1 of 2 strategies executed via binding contract by 31 Dec 2025 followed by robust continuous work (economic
performance) until completion:
Your StraightUp Solar project developer or project manager will set up a safe harbor strategy conversation with you. In preparation, consider your existing safe harbor knowledge and/or consult your tax advisor, assess your risk tolerance and cash position, and evaluate which approach feels most comfortable to you.
We look forward to successful outcomes together!
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