Understanding your bonus depreciation election
What your bonus deduction is actually worth
At 100% bonus depreciation, current law under the OBBBA, you deduct your entire depreciable basis in year one. On a $204,000 depreciable basis at a 25% combined tax bracket, that's a $51,000 immediate tax savings, all in the same year you install the system. That's cash back in your business well before you'd see it under the standard depreciation timeline. For the official rules on depreciation methods and recovery periods, IRS Publication 946 covers how MACRS applies to business property, including solar equipment. A size estimate is only half the decision for a business. The quick financing comparison tool in our Financing section can help you work out which way to pay for the system costs less.
Why total tax savings stays the same either way
Total tax savings across the full depreciation period is the same whether you take 100% bonus depreciation or spread it over the standard 6-year MACRS schedule. What changes is timing, not the total amount, since the same depreciable basis eventually gets fully deducted no matter which path you choose. The IRS issued interim guidance on the permanent 100% bonus rate in January 2026, which is worth checking for the latest election details. If you want a second opinion on the size itself, the roof space vs output estimator in our System Sizing section works from your roof area and daily load instead of your building type.
The real value of accelerating: present value
On the same $204,000 example, taking 100% bonus depreciation instead of the standard 6-year schedule adds about $4,629 in present value at a 6% discount rate, purely from getting the tax savings sooner rather than later. That's the time value of money at work, a dollar of tax savings today is worth more than the same dollar spread across the next five years. See how that immediate cash lines up against your payback timeline once you run the full numbers, and once you've confirmed your federal incentive, the rebate plus ITC combined calculator in our rebates and incentives section can help stack state or utility rebates on top.
When electing a lower rate might make sense
You can elect out of bonus depreciation entirely or choose a lower percentage if it benefits your specific tax situation, such as when you'd rather spread deductions across years with more predictable taxable income. Most businesses take the full 100% since it maximizes near-term cash flow, but it's worth running the numbers with your accountant, especially alongside the financing with bonus depreciation tool if you're using a loan, or the ITC calculator to see the full first-year picture together. The property tax exemption savings calculator covers a separate incentive many states offer for the added system value, worth checking alongside your depreciation election.