Publish Date: September 8th, 2025
The “One Big Beautiful Bill” (OBBB) was signed into law July 2025 and represents a significant shift in American energy policy. The Treasury Department also released rules to clarify some of the language in the bill. These changes accelerated the step-down of tax credits, and increasing the importance of safe harbor for solar projects. Now is the time to capture the most savings potential with commercial solar to reduce your operating expenses and increase NOI.
And, because building a commercial solar project typically takes a considerable amount of time, you’ll want to take advantage of safe harboring solar for your property. Safe harboring is a provision of tax law which allows customers to preserve the tax credit for a given year, even if construction of the system isn’t completed or the system isn’t in service (see more details below).
With all these layers and changes to commercial solar, it’s understandable if you’re having a little trouble decoding what it all means. To help you unravel the bill and additional rules, we’ve dug into the details to bring you the key changes you need to know about.
While Namaste Solar is not a tax professional (please consult your tax advisors for your specific circumstances), we are solar experts with 20 years under our belt. We have navigated many changes in policy at the federal and local level over the years to help our commercial partners maximize their savings. Our non-commissioned advisors are here to help you safe harbor solar.
Key Points to Safe Harbor Solar for Commercial
- You can secure the 30% tax credit plus applicable adders for your commercial solar project by safe harboring your project between now and July 4th, 2026.
- During that time, solar projects under 1.5 MW can either begin “physical work of a significant nature” or incur 5% of the project’s cost to secure safe harbor. Project over 1.5 MW need to begin “physical work of a significant nature” to achieve safe harbor.
- On January 1st, 2026, new Foreign Entities of Concern (FEOC) rules will impact all solar projects not yet safe harbored. The IRS is anticipated to release rules on FEOC in 2026.
- Based on the date your solar project is safe harbored or contracted, there are requirements for when the project must be placed in service.
Click here to view full version of the safe harbor solar for commercial timeline infographic.
How does Safe Harboring Solar work?
There are two ways to safe harbor solar for commercial properties. You can either incur 5% of the total project cost or begin physical work of a significant nature.
The five percent safe harbor test requires at least 5% of the price to be incurred on qualifying equipment such as solar modules, racking, or inverters. Namaste Solar generally recommends 10% of the projects cost to be sure safe harbor is achieved. For example, if a project’s scope or costs increases after the initial design or quote, you want to make sure it won’t affect your ability to qualify for the 30% tax credit.
The physical work test may include “off-site” or “on-site” work. Off-site work may include the manufacture of components, mounting equipment, support structures such (i.e. racking and rail systems), inverters and transformers and other power conditioning equipment. On-site work may include the installation of racking and other structures for PV module mounting. In addition, there is a continuity requirement to physical work, meaning the work must be continuous from start to finish.
Under the new rules, projects greater than 1.5 MW are required to use the physical work test to qualify for safe harbor between September 2nd, 2025 and July 4th, 2026. Projects less than 1.5 MW can use either the physical work test or the 5% rule to qualify for safe harbor during that same time period.
To get the most up-to-date information about your unique circumstances and details on how you can safe harbor solar, get in touch with our non-commissioned advisors today.
Safe Harbor, Solar, and FEOC Rules
An additional layer to all this are the new Foreign Entities of Concern (FEOC) restrictions that were put in place by the OBBB. These new rules begin on January 1st, 2026 and will impact any solar project not safe harbored at that time.
While the specifics around FEOC rules have not yet been released, FEOC will limit tax credit eligibility for solar projects based on the percentage of materials that come from certain countries. Projects that have significant “material assistance” from countries like China, Russian and North Korea will have limited access to the tax credits.
The IRS is anticipated to release rules on FEOC in 2026. Until then, our team is staying up to date on guidance to ensure your project receives the most tax credit and adders available. We’ll continue to provide updated information with you with as it becomes available.
Take Advantage of Safe Harbor for Your Solar Project
While there are significant changes to the commercial solar landscape, the future is still bright. Commercial solar will continue to provide great value while lowering operating expenses and boasting a strong ROI. Plus, in markets where there are green building regulations, solar will continue to be an attractive choice.
If you have been looking for ways to reduce your operating expenses and power your profits with positive change, then get off the sidelines. The time to safe harbor your solar project is now. Namaste Solar is a leading expert in commercial solar for Colorado with 20 years of experience, and our team is non-commissioned. That means you’ll get the best of the best – without the excessive pressure or fabricated urgency of other sales teams.
To get in touch with our commercial team to safe harbor your solar project, give us a call at 303-536-8920 or click the button below.
