Solar Panel Depreciation Calculator (MACRS)

Commercial solar equipment is 5-year MACRS property, so it depreciates over six tax years (half-year convention) with the accelerated front-loaded pattern (20% year one, 32% year two, etc.). Combined with bonus depreciation, much of the system's basis can be deducted in the first year or two — a key driver of commercial solar returns.

You reduce the depreciable basis by half of the ITC claimed. For example, a 30% ITC means the depreciable basis is reduced by 15% — so a $100,000 system with a 30% ITC depreciates a $85,000 basis. This 'basis reduction' is a solar-specific rule; enter the post-reduction basis into this calculator to model the depreciation correctly.

No — depreciation is for business/income-producing property. Homeowners with residential solar can claim the residential clean-energy tax credit but cannot depreciate a personal-use system. Depreciation (MACRS) applies to commercial, business or income-producing solar installations. If you lease your roof to a solar company or run solar for a business, depreciation may apply to the system owner.

Because it's one of three stacked benefits — the upfront Investment Tax Credit, accelerated MACRS depreciation (often with bonus), and the ongoing electricity savings or sales. The depreciation alone can recover a substantial share of the system cost through reduced taxes in the early years, dramatically shortening payback. That's why commercial solar financial models always include a MACRS depreciation schedule like this one; leaving it out understates the return significantly.