Incentives
MACRS Depreciation
Definition
The Modified Accelerated Cost Recovery System — the IRS's standard method for depreciating business assets. Most commercial energy equipment (solar, HVAC, LED lighting, battery storage) qualifies for 5-year or 7-year MACRS, allowing accelerated tax deductions compared to straight-line depreciation.
Why It Matters for Your Business
MACRS allows businesses to recover capital costs of energy equipment faster, improving cash flow and project ROI. When combined with the ITC or bonus depreciation, the total tax benefit from a qualified energy investment can often exceed 50% of the installed cost in Year 1.
Frequently Asked Questions
What depreciation schedule does commercial solar use?
Solar PV systems typically qualify for 5-year MACRS. The ITC reduces the depreciable basis by 50% of the credit claimed. Consult IRS Publication 946 and a tax professional.
Can MACRS be combined with bonus depreciation?
Yes. Bonus depreciation allows 100% first-year expensing (through 2022, phasing down thereafter) of MACRS-eligible property. This means qualifying energy assets can be fully deducted in the year they are placed in service.