MACRS Depreciation (Solar) Calculator

Accelerated depreciation schedule for solar assets.

Total project cost ($)

ITC rate (decimal)

Bonus depreciation (%)

Federal marginal tax rate

State tax rate

Tab to move between fields

Year 1 tax savings ($)

$332,350.00

≈ 8 Teslas

Depreciable basis ($)$1,700,000.00

Year 1 depreciation ($)$1,156,000.00

Total depreciation ($)$1,700,000.00

Total tax savings ($)$488,750.00

NPV of tax savings ($)$436,633.00

ITC credit amount ($)$600,000.00

Effective net cost ($)$963,367.00

Cost reduction (%)51.8%

How to Use This Calculator

Enter the total installed project cost and the applicable ITC rate.
Set the bonus depreciation percentage for the applicable tax year.
Enter federal and state marginal income tax rates.
Review Year 1 tax savings and the NPV of depreciation tax savings.
Use the effective net cost and cost reduction percentage for project financial modeling.

How the result changes with Total project cost ($)

Total project cost ($): Total installed cost of the solar project.
ITC rate (decimal): Federal ITC rate as a decimal (0.30 = 30%).
Bonus depreciation (%): Year-1 bonus depreciation percentage. 80% for 2023, 60% for 2024, 40% for 2025, etc.
Federal marginal tax rate: Federal corporate or individual marginal income tax rate.
State tax rate: State income tax rate (deductible from federal, so net impact is combined).

Year 1 tax savings ($): Tax savings from Year 1 depreciation including bonus.
Depreciable basis ($): Basis after ITC 50% reduction.
Year 1 depreciation ($): Depreciation deduction in year 1 (bonus + MACRS).
Total depreciation ($): Sum of all depreciation over 6 tax years.
Total tax savings ($): Undiscounted total tax savings from depreciation.
NPV of tax savings ($): Net present value of depreciation tax savings at 7% discount rate.
ITC credit amount ($): Federal Investment Tax Credit value.
Effective net cost ($): Project cost minus ITC minus NPV of depreciation savings.
Cost reduction (%): Percentage of project cost offset by ITC + depreciation.

Identify Input Parameters
4 parameters
Total project cost ($) = 2000000, ITC rate (decimal) = 0.3, Bonus depreciation (%) = 60, Federal marginal tax rate = 0.25 = 5 input(s) provided
Calculate Year 1 tax savings
Year 1 tax savings = year1Depreciation * combinedTaxRate
332350 = $332,350
Calculate Depreciable basis
Depreciable basis = projectCost - basisReduction
1700000 = $1,700,000
Calculate Year 1 depreciation
1156000 = $1,156,000