Trump tried to kill solar’s 5% safe harbor, a federal court brought it back

A federal judge reinstated the 5% safe harbor for solar energy tax credits on June 10, 2024, a provision that the Trump administration's Internal Revenue Service (IRS) had attempted to eliminate. This decision arrives less than a month before the July 4th deadline for the Federal Clean Energy tax credit, providing a significant reprieve for the solar industry. The safe harbor allows developers to claim the full 30% investment tax credit (ITC) if they begin construction and spend at least 5% of the project's total cost, even if they do not meet all other requirements by the deadline. The IRS had previously issued guidance suggesting that projects must meet all "all events" tests by the deadline to qualify, effectively nullifying the safe harbor. The court's ruling, however, found that the IRS guidance was an unlawful attempt to circumvent Congress's intent when it established the safe harbor provision in the Inflation Reduction Act of 2022. This victory is crucial for the continued growth and investment in solar projects across the United States, ensuring greater certainty for developers and investors.