Energy Incentives Expiring in 2026: Don't Miss These Deadlines

Q: What energy tax credits are expiring in 2026?

The most important energy incentive deadline in 2026 is the phase-out of bonus depreciation. For 2026 tax year assets, bonus depreciation drops to 20% (down from 40% in 2025), then goes to 0% beginning 2027 under the TCJA sunset. This creates urgency to place commercial energy projects in service by December 31, 2026. State solar program blocks are also filling — Massachusetts SMART Block 8, Illinois ABP, and New Jersey Transition Incentive programs are all expected to reach capacity by mid-to-late 2026. Source: IRS, DSIRE USA, state program administrators.

Q: When does bonus depreciation expire?

Bonus depreciation is phasing out under the 2017 Tax Cuts and Jobs Act (TCJA). The bonus rate in 2025 was 40%, drops to 20% for 2026 tax year assets (placed in service by December 31, 2026), then goes to 0% starting 2027 unless Congress extends it. This means commercial solar, HVAC, LED lighting, and battery storage projects placed in service in 2026 can still claim 20% bonus depreciation on top of ITC credits. Projects started in 2027 without Congressional action lose this benefit entirely. Source: IRS Publication 946.

Q: Is Section 179D expiring in 2026?

No — Section 179D was made permanent by the Inflation Reduction Act (IRA) of 2022. There is no current statutory expiration date for the 179D deduction. However, the enhanced IRA rates (up to $5.65/sqft in 2026, inflation-adjusted annually) depend on the IRA remaining intact. There is legislative uncertainty as Congress considers modifications to IRA provisions, but as of May 2026, 179D is available and active. Commercial building owners and designers should claim 179D for qualifying projects now rather than waiting for political clarity.

Q: What state solar incentive programs are running out in 2026?

Several state solar incentive programs are projected to exhaust capacity or reach funding limits in 2026: (1) Massachusetts SMART Program Block 8 for commercial projects (>25 kW) — project applications expected to fill by mid-2026; (2) Illinois Adjustable Block Program (ABP) — current program year through October 2026, with commercial blocks expected to fill before year-end; (3) New Jersey Transition Incentive Program — TREC budget projected to exhaust by August 2026; (4) California SGIP large storage tier — current budget expected to exhaust by Q4 2026. Source: DSIRE USA program administrators.

Q: Can I stack 179D with ITC and bonus depreciation?

Yes, with important limitations. Section 179D (deduction) and the Investment Tax Credit (ITC, Section 48E) can be used in combination on commercial energy projects, but the 179D deduction reduces the depreciable basis for ITC purposes. Specifically: take the ITC first, which reduces the depreciable basis by 50% of the credit amount; then apply MACRS or bonus depreciation on the reduced basis; then apply 179D separately for the building envelope improvements that don't overlap with solar. A qualified tax advisor or energy CPA should model the optimal stacking sequence for your project. Use EnergyStackHub's IRA Calculator for a preliminary estimate.

EnergyStackHub Team

⏳ Expiring Programs Updated May 2026

Energy Incentives Expiring in 2026: Don't Miss These Deadlines

Federal bonus depreciation phases out after 2026. State solar program blocks are filling. Several state utility rebate cycles close mid-year. This tracker covers every major commercial energy incentive with a 2026 deadline — updated monthly from DSIRE and federal regulatory sources.

🗓 Published May 3, 2026 📋 Sources: DSIRE USA, IRS, state program administrators ⏱ 7 min read

[VERIFIED DATA — Source: IRS, DSIRE USA, state program administrators. Last verified: May 3, 2026]
The most critical commercial energy incentive deadline in 2026 is bonus depreciation: the rate drops from 40% (2025) to 20% for assets placed in service in 2026, then to 0% beginning 2027 under TCJA sunset provisions. This affects solar, HVAC, battery storage, and LED lighting projects placed in service by December 31, 2026. The Investment Tax Credit (ITC) remains at 30% through 2032. Section 179D is permanent with no expiration date, but faces legislative uncertainty. Multiple state solar program blocks — Massachusetts SMART, Illinois ABP, New Jersey Transition Incentive — are expected to exhaust capacity by mid-to-late 2026. Check eligibility now at EnergyStackHub.com/incentives/finder.

Dec 31

Bonus Depr. Deadline

20%

2026 Bonus Depr. Rate

$5.65

179D Max $/sqft (2026)

30%

ITC — Good Thru 2032

⚠ Act Before These 2026 Deadlines

Dec 31, 2026: Bonus depreciation drops to 0% in 2027 — last chance for 20% bonus on commercial energy assets
Mid-2026: Massachusetts SMART commercial solar blocks (>25 kW) expected to fill — waitlists already forming
Oct 2026: Illinois ABP commercial program year closes — new projects may miss current incentive rates
Aug 2026: New Jersey Transition Incentive Program (TREC) budget projected to exhaust
Ongoing: 179D is permanent but enhanced IRA rates face legislative risk — claim current projects now

Federal Incentives: Status in 2026

Bonus Depreciation — Phases Out After 2026 ⚠

Under the 2017 Tax Cuts and Jobs Act (TCJA), 100% bonus depreciation was available 2017–2022. The phase-down schedule:

Tax Year	Bonus Depreciation Rate	Status
2022	100%	Expired
2023	80%	Expired
2024	60%	Expired
2025	40%	Expired
2026	20%	⚠ Current — expires Dec 31
2027+	0%	Expires unless Congress acts

What this means for commercial projects: Equipment placed in service by December 31, 2026 can claim 20% bonus depreciation in the first year, reducing the after-tax cost of solar panels, HVAC equipment, LED lighting, and battery storage by approximately 7–8% (assuming a 35–40% combined tax rate). Projects delayed to 2027 lose this benefit. Congress has periodically extended bonus depreciation — but no extension has been passed as of May 2026.

Project timeline reality check: Commercial solar and HVAC projects require 60–150 days from contract to placed-in-service. Projects not under contract by August 2026 face meaningful risk of missing the December 31 bonus depreciation window. Start procurement now.

Investment Tax Credit (ITC) — 30% Through 2032

The IRA extended the ITC at 30% through 2032 for solar, battery storage, fuel cells, geothermal, and other qualifying technologies. The ITC is not expiring in 2026 — commercial buildings have until 2032 before the phase-down begins. However, the domestic content bonus (10%) and energy community bonus (10%) require additional qualification documentation that can delay projects.

Section 179D — Permanent, But Monitor Legislative Risk

Section 179D was made permanent by the IRA. The 2026 rate is up to $5.65/sqft (inflation-adjusted from the base $5.00/sqft). There is no statutory expiration. However, Congress is considering broad modifications to IRA provisions — the enhanced 179D rates that were added by the IRA (vs. the pre-IRA $1.88/sqft cap) could be reduced as part of budget reconciliation. Claim 179D for completed projects immediately rather than waiting.

→ See our full guide: Section 179D Guide 2026

State Programs: Expiring or Capacity-Limited in 2026

State solar and efficiency incentive programs don't "expire" cleanly — they run out of budget allocation or complete their program year. These are the programs most at risk of closing before end of 2026:

Massachusetts · Solar · State Program

SMART Program — Commercial Block 8 (>25 kW)

DOER tracking shows Block 8 commercial capacity is filling. New applications for large commercial solar above 25 kW are being placed on waitlists in multiple utility territories. Source: MA DOER SMART tracking dashboard.

$0.06–0.30/kWh

⚠ Mid-2026 projected

Illinois · Solar · State Program

Adjustable Block Program (ABP) — Commercial Solar

Current ABP program year runs through October 2026. Commercial project blocks in ComEd and Ameren territories are expected to fill before year-end. Applications via approved vendors only — lead time for vendor qualification adds 30–60 days.

$50–$80/MWh RECs

⚠ Oct 2026

New Jersey · Solar · State Program

Transition Incentive Program (TREC)

TREC budget ($152/MEC) for net-metered commercial projects is projected to exhaust by August 2026 per NJ BPU projections. Once the program closes, applications will be directed to the replacement long-term program, which has lower incentive rates.

$152/MEC

⚠ Aug 2026

California · Storage · State Program

Self-Generation Incentive Program (SGIP) — Large Storage

CPUC-administered program for commercial battery storage. Current budget allocation for large commercial storage (>10 kWh) is expected to exhaust by Q4 2026. Waitlists are already active for some project categories in PG&E territory. Source: SGIP program administrators.

$0.15–$0.50/Wh

⚠ Q4 2026

Federal · Depreciation

Bonus Depreciation — 20% Rate Last Year

All commercial energy equipment (solar, HVAC, storage, LED) placed in service by December 31, 2026 qualifies for 20% first-year bonus depreciation. Rate goes to 0% in 2027 unless Congress extends TCJA provisions. This is the single most impactful 2026 deadline for commercial energy ROI.

20% of cost

⚠ Dec 31, 2026

New York · Efficiency · State Program

NYSERDA FlexTech Program — Current Cycle

The current FlexTech program year for engineering feasibility studies and retro-commissioning expires September 30, 2026. Applications received after this date will be evaluated under new program year terms, which may have different cost-share ratios or eligible measures.

50% of costs up to $500K

Sep 30, 2026

Colorado · Efficiency · State Program

Colorado Energy Office — Commercial Efficiency Loan

Current revolving loan fund cycle closes to new applications July 1, 2026. Next cycle pending state budget appropriation. Loans at 3–5% for HVAC, insulation, and lighting projects from $5,000–$500,000.

3–5% below-market loans

Jul 1, 2026

Full Expiring Incentives Table — 2026

Program	Type	Amount	Deadline / Status	Urgency
Bonus Depreciation	Federal	20% of project cost	Dec 31, 2026 (0% in 2027)	CRITICAL
MA SMART Block 8 — Commercial	Massachusetts	$0.06–0.30/kWh	Mid-2026 (capacity limit)	HIGH
IL Adjustable Block Program	Illinois	$50–80/MWh RECs	Oct 2026 (program year end)	HIGH
NJ Transition Incentive (TREC)	New Jersey	$152/MEC	Aug 2026 (budget exhaustion)	HIGH
CA SGIP — Large Storage	California	$0.15–0.50/Wh	Q4 2026 (budget exhaustion)	MEDIUM
NY FlexTech Program	New York	50% of study costs	Sep 30, 2026 (program year)	MEDIUM
CO Energy Office Loan	Colorado	3–5% loans up to $500K	Jul 1, 2026 (cycle end)	MEDIUM
VA Clean Energy Tax Credit	Virginia	20% of installed cost	Dec 31, 2026 (sunset)	MEDIUM
Section 179D (IRA-enhanced rates)	Federal	Up to $5.65/sqft	Permanent — legislative risk	MONITOR
ITC (30%) — Solar & Storage	Federal	30% of project cost	Through 2032	STABLE

Programs NOT expiring in 2026: The 30% Investment Tax Credit (ITC) remains at full rate through 2032. Section 179D deduction remains available with no expiration date. MACRS standard depreciation (without bonus) is permanent. Most EmPOWER Maryland and utility rebate programs will renew for 2027.

Check Your Incentive Eligibility →

EnergyStackHub's Incentive Finder maps all available federal, state, and utility programs for your building type and location — including which 2026 deadlines apply to you.

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Frequently Asked Questions

The most important 2026 deadline is bonus depreciation, which drops from 20% (2026) to 0% in 2027. Several state solar program blocks — Massachusetts SMART, Illinois ABP, New Jersey TREC — are expected to exhaust capacity by mid-to-late 2026. The ITC (30%) and Section 179D are not expiring. Source: IRS, DSIRE USA.

Bonus depreciation is 20% for tax year 2026 (assets placed in service by December 31, 2026) and goes to 0% for 2027 and beyond under the TCJA phase-down schedule. This affects all qualified property including solar, HVAC, LED lighting, and battery storage. Congress has the authority to extend this — but as of May 2026, no extension has passed. Source: IRS, Tax Cuts and Jobs Act (TCJA) of 2017.

No. Section 179D was made permanent by the Inflation Reduction Act (IRA) in 2022 with no expiration date. The 2026 deduction rate is up to $5.65/sqft (inflation-adjusted). However, the IRA-enhanced rates (which increased the cap from $1.88/sqft to $5.00/sqft base) depend on IRA provisions remaining intact. Legislative uncertainty exists around IRA modifications — but as of May 2026, 179D is fully available. Claim it for completed qualifying projects now.

Yes, with important rules. The ITC reduces the depreciable basis by 50% of the credit amount (e.g., a $1M solar project with 30% ITC: $300K credit, depreciable basis reduced to $850K). Apply bonus depreciation to that reduced basis. Section 179D is applied separately to building improvements not covered by ITC. Use the IRA Calculator at EnergyStackHub for a preliminary estimate — and work with an energy tax CPA for the final analysis.

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Data Sources & Verification
Federal incentives: IRS Publication 946 (Bonus Depreciation), IRS Notice 2023-29 (179D), IRS Form 3468 (ITC). irs.gov.

State programs: DSIRE USA (dsireusa.org) — NC Clean Energy Technology Center's database of state, local, utility, and federal incentive programs for renewable energy and energy efficiency. Individual program data verified against state program administrator websites.

Program capacity/expiration notes: Based on publicly available program tracking data and capacity utilization reports from respective state agencies. Capacity exhaustion dates are projections and may change. Always verify current status directly with program administrators before making investment decisions.

Last verified: May 3, 2026. Updated monthly. This page is not tax or legal advice — consult a qualified tax professional before claiming energy tax credits.