These Commercial Energy Credits Are Still Going Strong
The One Big Beautiful Bill Act of 2025 decimated residential and commercial tax credits for energy efficiency programs. Solar, HVAC, and insulation programs were particularly affected. While there are many local, state, and utility-based options available, many federal energy efficiency tax credits are off the table after 2025.
But not all. Commercial geothermal tax credits and qualified battery storage technology have survived the OBBBA cuts, making them ideal options for many Midwest businesses.
What Tax Incentives Are Here to Stay?
Within the Investment Tax Credit (ITC) and Production Tax Credit (PTC), tax credits for commercial geothermal projects and battery storage technology are safe - at least for projects completed in 2026. These programs are set to last until 2034, unless they are extended.
Geothermal Tax Credits
Tax credits are still available for many geothermal projects that qualify, including:
A 6% base credit through 2032, plus additional bonus credits when the project meets prevailing wage, apprenticeships, and other requirements. The maximum credit is 50-60% for most organizations.
Public and tax-exempt entities can claim incentives through direct pay, which means they get the full credit amount as a cash payment from the IRS.
Geothermal tax credits can be used for new construction projects and retrofits that install ground-source geothermal heating and cooling systems.
After 2032, the ITC is scheduled to phase down from 6% to 5.2% in 2033, then 4.4% in 2034.
Read More: How Commercial Solar Panels Are Priced
Your Keen energy consultant will help determine whether your project qualifies, how to meet all requirements, and handle all the paperwork to make claiming the credit easy.
Battery Storage Technology Tax Credits
Solidified as a part of expanded IRA energy efficiency tax credits in 2022, qualified battery storage technology incentives are still available in 2026 through the ITC. Systems can be installed as standalone storage units or paired with on-site renewable generation systems, such as solar power.
Battery storage projects win the same 6% base credit through 2032 as geothermal, with the same bonus credits for prevailing wage, apprenticeship, and additional requirements.
Direct pay from the IRS is available for public and tax-exempt organizations.
Standalone and integrated systems qualify as long as they meet technical and operational requirements, such as a minimum capacity of 5 kWh.
Some notable changes to battery storage complicate filing, including:
Material restrictions if sourced from “designated foreign entities of concern”, or FEOCs.
The ITC for battery storage will wind down at a faster clip than originally planned, with filers able to claim 25% less of full value in 2033 and 2034, when the program is expected to sunset.
What Commercial Energy Tax Incentives Are Going Away?
The biggest casualty of the OBBBA is section 179D, the tax deduction for energy-efficient commercial buildings. Filers can still claim 179D through June 30, 2026, but the project must be completed and in service before that date to qualify.
Find Out What Tax Credits Are Available Now
There are still many significant incentives to offset the costs of your energy upgrades and reward your business for making energy efficiency a part of your long-term strategy. Count on Keen’s experienced team to identify relevant tax credits and other financing options based on your city, state, and industry to shorten payback periods and provide lasting value.
Contact a Keen energy consultant today to get started.