BOSTON– The U.S. Treasury has issued updated guidance on the federal Investment Tax Credit (ITC) for solar projects, tightening compliance requirements for developers across the country. However, the new rules also extend the timeframe to capture both federal and state incentives by 10 months—a development that Solect Energy says creates new opportunities for businesses, schools, and municipalities in the Northeast.
The revised rules eliminate the Safe Harbor 5% Spend Test for projects larger than 1.5 MW AC and introduce stricter equipment sourcing requirements beginning in 2026 tied to “Foreign Entities of Concern” (FEOC). Importantly, projects under 1.5 MW AC—including most commercial, municipal, and campus-scale rooftop and canopy installations—remain eligible for the 5% Spend Test, preserving a clear path to secure the ITC if development begins soon.
“The 10-month extension provides organizations with some additional runway, but it is not open-ended,” said Matt Shortsleeve, Senior Vice President of Policy & Marketing at Solect Energy. “Commercial rooftop projects can take months to design, permit, and install, so the time to act is now. At Solect, we’re helping organizations capture the ITC, pair it with state incentives, and benefit from bonus depreciation—making solar a compelling investment in the Northeast.”
Key opportunities available under the updated guidance include:
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Bonus depreciation: 100% first-year depreciation is available.
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State-level incentives: Programs such as Massachusetts’ SMART 3.0, Rhode Island’s REG Program, and New York’s NY-Sun continue to provide strong support for solar adoption.
With nearly 1,000 completed projects and a team of more than 100 professionals, Solect Energy is proactively securing compliant equipment and guiding organizations through evolving federal and state policies to help them maximize long-term value.
