The only free MACRS solar depreciation calculator that combines the full 5-year GDS schedule, 100% bonus depreciation (OBBBA 2025), ITC basis adjustment, and NPV of all tax benefits — with a year-by-year table your CPA can use. Built for commercial solar owners, EPCs, and sales professionals.
MACRS is the single most underexplained commercial solar tax benefit — and the one most likely to close a deal or determine whether a project pencils out. Our free MACRS solar depreciation calculator is the only tool that combines the IRS 5-year GDS schedule, ITC basis adjustment, bonus depreciation phasedown history (TCJA through OBBBA), state conformity modeling, and full NPV analysis in one place. No paywalls, no email gates.
The full 5-year GDS MACRS depreciation schedule per IRS Publication 946 — with Year 1 bonus deduction flagged, actual tax year labels, and a printable table your accountant can use directly with Form 4562.
The IRS requires reducing the MACRS depreciable basis by 50% of the ITC claimed — a "haircut" many solar calculators miss entirely. Our tool calculates and displays the exact basis reduction automatically, so you never overstate your deductions.
100% bonus depreciation is permanently restored for 2025+ installations under the OBBBA. Our calculator models all bonus scenarios (40%–100%) and shows the NPV of your full incentive stack — ITC plus MACRS — discounted at your cost of capital.
CFOs and boards need the net cost number, not the gross quote. Use this MACRS solar depreciation calculator to show the effective system cost after ITC + MACRS before any board presentation. "Our $500K system has an effective net cost of $240K" is a deal-closer.
The commercial solar tax benefits calculator every solar rep needs for B2B proposals. A sales rep who can walk a CFO through MACRS depreciation and ITC basis adjustment — year by year — closes more commercial deals. Print the depreciation schedule for leave-behind proposals.
Use this commercial solar depreciation calculator to quickly verify client-facing MACRS schedules before preparing Form 4562. The tool displays IRS Pub. 946 rate sources, bonus depreciation per TCJA and OBBBA, and the ITC basis reduction calculation — all sourced and transparent.
Results update in real time. No submit button. Here's how to get the most accurate MACRS depreciation schedule for your commercial solar system.
Enter the gross installed cost of the commercial solar system — before any incentives, rebates, or tax credits. This is the total project cost from your installer's quote, including panels, inverter, racking, electrical work, and installation labor. The ITC and MACRS calculations all derive from this number.
Choose 30% for the standard commercial ITC (Section 48E), 40% if your project qualifies for the energy community bonus, or 50% if you also meet domestic content requirements. Select 0% if you're opting out or your entity type doesn't qualify. The ITC basis reduction is calculated automatically.
Selecting the year automatically fills the correct bonus depreciation percentage per the TCJA phasedown schedule and OBBBA restoration. For systems placed in service January 20, 2025 or later, 100% bonus depreciation is available under OBBBA. You can override the auto-filled percentage to match your specific circumstances.
Most commercial solar projects use GDS (General Depreciation System) 5-year schedule — the fastest recovery. Use Half-Year convention for standard installations. If more than 40% of all your business's MACRS property placed in service during the year is placed in Q4, use the Mid-Quarter Q4 convention — the Year 1 rate drops significantly to 5% vs. 20%.
Enter your combined federal + state effective marginal tax rate to see the dollar value of each year's tax savings. Review the Effective Net System Cost hero number — this is your bottom line after ITC + MACRS combined. Share or print the year-by-year depreciation table directly with your CPA for Form 4562 preparation.
Every output in the MACRS solar depreciation calculator serves a specific purpose in your financial analysis. Here's how to interpret them.
The amount eligible for MACRS deductions after the ITC basis reduction (50% of ITC). This — not the full system cost — is what gets depreciated. On a $500K system with 30% ITC: depreciable basis = $425,000.
The sum of all MACRS deductions over the full recovery period. Always equals the depreciable basis (100% recovered). For GDS, all basis is recovered over 6 tax years (Years 1–6 due to half-year convention).
The dollar value of the Investment Tax Credit — a direct 1:1 reduction in federal taxes owed. 30% ITC on a $500K system = $150,000 tax credit. This directly offsets your tax liability dollar-for-dollar.
The total federal (+ state if enabled) tax savings from all MACRS depreciation deductions. Deductions × tax rate = cash tax savings. At 25% combined rate on $425K basis: $106,250 in tax savings over the recovery period.
The net present value of the full incentive stack (ITC + MACRS), discounted at your cost of capital. Since MACRS deductions come over 6 years, future deductions are worth less. NPV gives a truer picture of the present value of your tax benefits.
Your system's true out-of-pocket cost after the ITC credit plus MACRS tax savings. On a $500K system with 30% ITC and 100% bonus depreciation at 25% tax rate, effective net cost is typically around 48–52% of gross — the government effectively subsidizes nearly half the project.
Every calculation follows IRS Publication 946. All formulas are sourced and displayed below for full transparency.
Worked example: A commercial $100,000 solar installation in 2024. Federal ITC (30%): $30,000 credit. Depreciable basis: $100,000 − ($30,000 / 2) = $85,000. MACRS 5-year schedule: Year 1: 20% = $17,000. Year 2: 32% = $27,200. Year 3: 19.2% = $16,320. Year 4–5: 11.52% each = $9,792. Year 6: 5.76% = $4,896. At 35% tax bracket, total tax savings from depreciation: $29,750.
Calculations sourced from SurgePV’s MACRS Depreciation Calculator — surgepv.com/tools/macrs-depreciation-calculator/
Official IRS depreciation rates for commercial solar under IRS Publication 946.
| Recovery Year | GDS Rate | On $100K Basis |
|---|---|---|
| Year 1 | 20.00% 200% DB | $20,000 |
| Year 2 | 32.00% 200% DB | $32,000 |
| Year 3 | 19.20% Switch SL | $19,200 |
| Year 4 | 11.52% | $11,520 |
| Year 5 | 11.52% | $11,520 |
| Year 6 | 5.76% | $5,760 |
| Total | 100.00% | $100,000 |
| Placed in Service | Bonus % | Governing Law |
|---|---|---|
| 2022 and before | 100% | TCJA original |
| 2023 | 80% | TCJA phasedown |
| 2024 | 60% | TCJA phasedown |
| Jan 1–19, 2025 | 40% | TCJA phasedown |
| Jan 20, 2025+ | 100% OBBBA | One Big Beautiful Bill Act |
| 2026 and beyond | 100% Permanent | OBBBA (permanent) |
MACRS depreciation begins the year the system is "placed in service" — not when you paid for it, when construction started, or when permits were pulled. Your installer's commissioning certificate is the official placed-in-service documentation. Missing this date means missing the Year 1 deduction entirely.
If your business places more than 40% of all MACRS property into service in Q4, you're required to use the mid-quarter convention — and your solar system's Year 1 rate drops from 20% to just 5%. On a $500K system at 25% tax rate, that's the difference between $25,000 and $6,250 in Year 1 tax savings.
The ITC basis reduction is the most commonly misunderstood rule in commercial solar tax planning. When you claim the 30% ITC on a $500K system ($150K credit), the IRS requires you to reduce your MACRS depreciable basis by $75K before applying any depreciation rates. You depreciate $425K, not $500K. Failing to apply this "ITC haircut" can trigger penalties and back taxes.
The TCJA phasedown that reduced bonus depreciation from 100% to 80% (2023), 60% (2024), and 40% (Jan 1–19, 2025) was permanently reversed by the One Big Beautiful Bill Act signed July 4, 2025. Any commercial solar system placed in service after January 19, 2025 can elect 100% first-year bonus depreciation.
MACRS (Modified Accelerated Cost Recovery System) is the IRS-mandated depreciation method for business assets in the United States. Solar energy property qualifies for a 5-year recovery period under GDS, allowing commercial businesses to deduct the full depreciable basis over 6 tax years. The 5-year MACRS schedule is front-loaded: Year 1 = 20%, Year 2 = 32%, then declining through Year 6. A business recovers 52% of its depreciable basis in just the first two years — before factoring in bonus depreciation.
Under the GDS 5-year schedule with half-year convention (IRS Pub. 946, Table A-1): Year 1 = 20.00%, Year 2 = 32.00%, Year 3 = 19.20%, Year 4 = 11.52%, Year 5 = 11.52%, Year 6 = 5.76% — totaling 100%. These rates apply to the depreciable basis after ITC basis reduction, not to the full system cost. If 100% bonus depreciation is elected (standard for 2025+ systems under OBBBA), 100% of the depreciable basis is deducted in Year 1, and Years 2–6 have zero regular MACRS deductions.
The IRS requires reducing the MACRS depreciable basis by 50% of the ITC amount claimed — the "ITC haircut" under IRC Section 50(c). Example: $500,000 system with 30% ITC. ITC = $150,000. Basis reduction = $75,000. Depreciable basis = $425,000. Many solar salespeople incorrectly assume the business can depreciate the full $500,000. Our calculator applies the ITC basis reduction automatically.
Bonus depreciation for solar in 2025 and 2026 is 100%, permanently restored by the One Big Beautiful Bill Act (OBBBA) signed July 4, 2025. This means commercial solar systems placed in service after January 19, 2025 can elect to deduct 100% of their MACRS depreciable basis in the first year. The TCJA had been phasing down bonus depreciation: 80% in 2023, 60% in 2024, and 40% from January 1–19, 2025. OBBBA permanently reversed this phasedown.
No. MACRS depreciation is only available for business or income-producing property. A solar system on a personal residence does not qualify. Business owners (C-corps, S-corps, LLCs, partnerships, sole proprietors with Schedule C income) who own their solar systems outright are eligible. Solar lessees cannot claim MACRS — the leasing company (lessor) retains MACRS because they own the system.
Half-year convention is the standard for most commercial solar installations. It assumes all property placed in service during a tax year was placed at mid-year, giving 6 months of depreciation in Year 1 (yielding the 20.00% Year 1 rate). Mid-quarter convention applies when more than 40% of all the business's depreciable property placed in service during the tax year is placed in Q4 — and Year 1 rate drops from 20% to just 5% for a Q4 installation.
Form 4562 (Depreciation and Amortization) is the primary form for claiming MACRS depreciation, filed as an attachment to your business return (Form 1120, 1120S, 1065, or Schedule C). The 30% ITC is claimed separately on Form 3468 (Investment Credit). Your CPA can use the year-by-year table from this calculator as a reference to prepare and verify Form 4562.
Selling a commercial solar system before the end of the 5-year MACRS recovery period triggers depreciation recapture under Section 1250. The gain attributable to previously claimed depreciation is taxed as ordinary income at up to 25% federally. Additionally, selling within 5 years of claiming the ITC triggers partial ITC recapture: 20% of the ITC per year of the first 5 years remaining. Always consult a qualified CPA before selling a depreciated solar system.
Once you have your MACRS depreciation schedule, use these calculators to complete your commercial solar financial analysis.
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