Solar & battery
Solar Depreciation Calculator
Works depreciation on a business solar installation, where the rules need a professional.
Result
This is a simplified illustration of how accelerated depreciation on commercial solar generally works, using straight-line for the remaining basis rather than actual MACRS percentages, which are not evenly spread. Bonus depreciation rates, basis adjustment rules and recovery periods all change with legislation and none of this applies to a residential system. It is not tax advice: the numbers that matter depend on your entity, your basis and your liability, and belong with your accountant.
Get a Free Business AuditHow the calculation works
The depreciable basis spread over the applicable recovery period under the method that applies, with any bonus or expensing election considered. Solar on a business property is depreciable while solar on a personal residence is not, and the basis may be reduced where a credit has been claimed.
What moves the number
- Whether the installation is business or personal property.
- Depreciable basis, which a claimed credit may reduce.
- The recovery period and method that apply.
- Available bonus depreciation or expensing elections.
Where this one goes wrong
The interaction between depreciation and any energy credit claimed is the part that goes wrong, because claiming a credit can reduce the depreciable basis and the rules on bonus depreciation and expensing have changed repeatedly. Those interactions are specific enough that they belong with a tax professional rather than a calculator. A residential installation is generally not depreciable at all, so the first question is which category the property falls into.
Before you quote
- Establish whether the property is business or personal.
- Account for any basis reduction from a claimed credit.
- Confirm the current rules with a tax professional.
Where the rules come from
Questions
About this calculator
Can I depreciate solar on my home?
Generally not, since personal residence property is not depreciable. A business property or a rental may be, which makes the character of the property the first question before any depreciation arithmetic is worth doing.
Does claiming a credit affect depreciation?
It can reduce the depreciable basis, and the interaction between credits, bonus depreciation and expensing elections has changed repeatedly. That interaction is where errors occur and it is worth a professional rather than an estimate.
What recovery period applies?
It depends on the property and the rules in force, and the available elections change the timing considerably. Because the rules have been amended frequently, the current position should be confirmed rather than carried forward from a previous year.
The formula
basis = cost less half the credit claimed; first year = bonus depreciation plus the first regular year
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How to use this calculator
- System cost ($). Enter your own figure; the page starts at $180,000.
- Tax credit claimed (%). Basis is usually reduced by half the credit.
- First-year bonus depreciation (%). Enter your own figure; the page starts at 40%.
- Combined tax rate (%). Enter your own figure; the page starts at 27%.
- Recovery period (years). Enter your own figure; the page starts at 5.
The result updates as you type, so you can try a figure, see what it does to first-year deduction, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| System cost | $180,000 |
| Tax credit claimed | 30% |
| First-year bonus depreciation | 40% |
| Combined tax rate | 27% |
| Recovery period (years) | 5 |
What comes out
| Result | Value |
|---|---|
| First-year deduction main result | $79,560 |
| Depreciable basis | $153,000 |
| First-year tax saving | $21,481 |
| Total tax saving | $41,310 |
| Remaining to depreciate | $73,440 |
Depreciable basis is $153,000 after the credit adjustment. The first-year deduction of $79,560 is worth $21,481 in tax, and the full schedule is worth $41,310 over its life.
How sensitive the answer is
Holding everything else steady and changing only system cost, this is what happens to first-year deduction. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| System cost ($) | First-year deduction |
|---|---|
| $90,000 | $39,780 |
| $135,000 | $59,670 |
| $180,000 example above | $79,560 |
| $270,000 | $119,340 |
| $360,000 | $159,120 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- System cost ($)
- A money amount, starting at $180,000.
- Tax credit claimed (%)
- Basis is usually reduced by half the credit.
- First-year bonus depreciation (%)
- A percentage, between 0 and 100, starting at 40%.
- Combined tax rate (%)
- A percentage, between 0 and 60, starting at 27%.
- Recovery period (years)
- A number, between 0 and 20, starting at 5.
What the results tell you
| Result | What it is |
|---|---|
| First-year deduction | The headline result. A money figure. |
| Depreciable basis | A money figure. |
| First-year tax saving | A money figure. |
| Total tax saving | A money figure. |
| Remaining to depreciate | A money figure. |
A design still needs a site visit
Output and sizing figures use the assumptions you enter, not measured irradiance, shading or roof orientation at your address. Real production depends on all three, plus inverter behaviour and local interconnection rules.
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