Court Restores 5% Safe Harbor for Wind and Solar as July 4 Deadline Nears

Short summary

A June 2026 U.S. District Court decision restored the 5% Safe Harbor for wind and solar tax credits under Sections 45Y and 48E, vacating an IRS notice that had eliminated it. Wind and solar developers, tax equity investors, and utilities now have two pathways to establish project beginning-of-construction before the July 4, 2026 deadline. Companies should immediately reassess tax credit eligibility, update financing assumptions, and consider both the Safe Harbor and Physical Work Test strategies to manage risks if the government appeals.

• •Court vacated IRS Notice 2025-42, restoring 5% Safe Harbor for wind/solar tax credits
• •Developers have until July 4, 2026 to begin construction or risk losing Section 45Y/48E credits
• •Business should dual-track Safe Harbor and Physical Work Test strategies to hedge against government appeal

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