With less than a month left before the key, July 4th Federal Clean Energy tax-credit deadline, a federal judge has handed the solar industry an unexpected win, restoring the 5% safe harbor that Trump’s IRS tried to kill.
Last week, a US District Court for the District of Columbia vacated IRS Notice 2025-42, which had sought to eliminate the previous 5% “safe harbor” rule established in 2018, which defined the beginning of construction (BOC) date that could allow solar panel system projects with longer lead times to qualify for valuable Section 45Y and 48E tax credits.
If you missed it, here’s what the 2018 notice actually says:
SECTION 3. METHODS FOR ESTABLISHING BEGINNING OF CONSTRUCTION
.01 In general. This notice provides two methods for a taxpayer to establish thatconstruction of energy property has begun for purposes of the ITC under § 48. Ataxpayer may establish the beginning of construction by starting physical work of asignificant nature as set forth in section 4 of this notice (Physical Work Test).Alternatively, a taxpayer may establish the beginning of construction by meeting a safeharbor based on having paid or incurred five percent or more of the total cost of theenergy property as set forth in section 5 of this notice (Five Percent Safe Harbor).