Farm & rural
USDA stopped awarding new REAP grants in 2026 after rescinding its funding notice — but REAP guaranteed loans, the Section 48E commercial tax credit, and permanent 100% bonus depreciation all survived. Here's what's open and what to do before the tax-credit window closes.
Updated June 30, 2026 · 11 min read
The short answer: As of the April 15, 2026 Federal Register rescission, USDA is not awarding new REAP grants. The grant program is frozen while USDA rewrites the rules to comply with Executive Order 14315. What's still open for farm solar in 2026: REAP guaranteed loans, the Section 48E commercial tax credit, and permanent 100% bonus depreciation. If you finish a project this year you may be able to stack the loan, the credit, and depreciation — but the 48E solar window turns on a hard July 4, 2026 begin-construction date set by statute. Get a free farm solar estimate before the window narrows.
If you've been Googling "USDA REAP grant farm solar," much of the older guidance no longer reflects the 2026 rules. Here's the current state of each program.
USDA's Rural Energy for America Program (REAP) used to be the headline incentive for farm energy projects — grants that covered a real chunk of the cost. In 2026, that grant stream is frozen.
Here's what happened, in order. USDA rescinded the prior funding notice — the October 16, 2024 NOFO — in a Notice of Rescission published in the Federal Register on April 15, 2026. The notice says the rescission is effective immediately and that USDA is amending its REAP regulations, with new funding to be announced after those changes publish. In plain English: no new grant awards until new rules are in effect.
The pause is tied to Executive Order 14315, "Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources." USDA is amending its program regulations (7 CFR 4280) to comply with it.
Two things matter for you:
The "REAP covers up to 50% of your farm solar project" figure was true under the prior program. It is not a grant you can get for a 2026 project today.
Be concrete about this, because it affects contracts you might be about to sign.
The generous numbers you've seen — up to 50% federal cost-share, with renewable-energy grants ranging from $2,500 to $1,000,000 — are the now-frozen IRA-era terms. Those are what the paused program offered. The new rules may change them. Treat any grant figure you see today as historical, not as a current offer.
The practical takeaway: do not sign a solar contract assuming grant dollars you can't actually get this year. If your project's math only works with a 50% grant, that math doesn't work in 2026 — at least not yet. Build your numbers on what's open: loans, the 48E credit, and depreciation.
Here's the good news on the USDA side: the guaranteed loan half of REAP survived the freeze. USDA said it would continue accepting REAP guaranteed loan applications while grant awards are paused — the rescission hit the grant stream, not the loan guarantees.
A REAP guaranteed loan isn't free money — it's debt with a federal backstop that makes lenders more comfortable, which can lower your financing cost. Under the published terms, a guaranteed loan can cover up to 75% of total eligible project costs or $25 million, whichever is less, with loan terms up to 40 years, and an 80% guarantee for loans approved in FY2025. (The guarantee percentage is set annually in a Federal Register notice, so it can change year to year — confirm the current figure with your lender.)
| REAP Grant | REAP Guaranteed Loan | |
|---|---|---|
| Status in 2026 | Paused — no new awards | Open — still accepted |
| What it is | Cost-share (money you don't repay) | Loan with a USDA guarantee to your lender |
| Coverage | Was up to 50% cost-share ($2,500–$1M); frozen, subject to new rules | Up to 75% of total eligible project costs, or $25M, whichever is less |
| Who approves | USDA (awards frozen) | Your lender, backed by USDA's guarantee (80% for FY2025) |
| The catch | Closed until new regulations + funding notice | It's debt — you repay it. And ground-mount limits apply (below) |
In an August 19, 2025 announcement, USDA Secretary Brooke Rollins said the agency will no longer use taxpayer dollars to fund solar panels on productive farmland. USDA set out concrete eligibility changes for solar under REAP:
The direction of travel is clear: USDA wants to support solar that offsets a farm's own energy use, not large ground-mount arrays that occupy farmland and sell power back to the grid.
The practical takeaway: if you want to stay aligned with where USDA support is going, lean toward rooftop and behind-the-meter solar — systems sized to offset the metered electricity your operation actually consumes. A roof-mounted array on a shop or barn, sized to your historical usage, is the safer bet under current signals than a big ground-mount field. (USDA's published criteria target ground-mount systems specifically; confirm how your project is classified with your installer and lender.)
When people hear "the solar tax credit ended," they're thinking of the residential credit (Section 25D), which is gone (more on that below). But that's not the credit a farm business uses anyway.
Farm businesses claim the Section 48E Clean Electricity Investment Credit — the commercial credit for business-use property. And it survived. Here's how the rate stacks up, straight from the IRS:
| Component | Value | Condition |
|---|---|---|
| Base rate | 6% of qualified investment | Always |
| Prevailing wage + apprenticeship | Up to 30% (5× the base) | Meet PWA requirements — or qualify under the under-1-MW exception |
| Domestic content adder | +10 percentage points | Meet steel/iron/manufactured-products requirements |
| Energy community adder | +10 percentage points | Facility located in an energy community |
The most important line for a typical farm: the under-1-MW exception. Per IRS guidance, a qualified facility with a maximum net output of less than 1 megawatt (measured in alternating current) gets the increased credit rate without having to satisfy prevailing-wage and apprenticeship requirements. Most farm-scale arrays fall under that threshold — which means most farm solar can reach the full rate without PWA compliance.
The two +10-point adders are real but conditional. Domestic content depends on where your equipment is sourced; energy-community status depends on your location. Don't assume you qualify for either — verify with your installer and tax advisor.
This is the single most time-sensitive fact for any farmer reading this in mid-2026.
Under the One Big Beautiful Bill, the 48E credit terminates early for solar and wind. The statutory rule: a solar project that begins construction after July 4, 2026 must be placed in service by December 31, 2027 to qualify. Begin construction on or before July 4, 2026 and you're on the safer side of the line, with a longer runway to finish and place the project in service. (IRS Notice 2025-42; The Tax Adviser.)
How do you prove construction "began"? The most reliable method is the Physical Work Test — physical work of a significant nature on the project. There's also a 5% cost safe harbor, but its status is unsettled right now: Notice 2025-42 had limited that safe harbor (broadly, to solar facilities of 1.5 MW or less), but on June 6, 2026 a federal court vacated Notice 2025-42, which — pending an expected appeal — restores the broader 5% safe harbor. (Foley Hoag.) Because that's in flux, don't build your plan around the safe harbor — the Physical Work Test is the dependable path, and your CPA should confirm your specific facts.
What is not in flux: the July 4, 2026 begin-construction date is set by statute, and the court ruling did not change it. If the 48E credit matters to your project economics, the time-sensitive move is to get construction genuinely started before that date.
The other survivor is depreciation. The One Big Beautiful Bill made 100% first-year bonus depreciation permanent for qualified property acquired after January 19, 2025 (IRS Notice 2026-11). Business solar is depreciable property, which means a farm can generally take the 48E credit and depreciate the system's cost.
Two cautions:
The plain-English version: 48E plus bonus depreciation can meaningfully lower the after-tax cost of a farm solar system — but the exact figure depends on your specific tax situation.
This trips up a lot of farm families. The Section 25D residential clean energy credit ended for expenditures made after December 31, 2025 — and an expenditure is treated as made when the original installation is completed (26 U.S.C. § 25D). So a homeowner who buys a system with cash or a loan and finishes installation in 2026 gets $0 federal residential credit.
Why does this matter to a farm? Because many farms have both a home and a business on the property. A farmhouse rooftop system for personal home use is residential — that's the dead 25D credit. The business-use portion of your solar may qualify for the commercial 48E credit. They are two different credits with two different fates.
One detail worth flagging: the live IRS Residential Clean Energy Credit page still carries stale boilerplate that you can claim the credit "until the credit begins to phase out in 2033" — even while the same page states the credit "is not available for any property placed in service after December 31, 2025." The 2033 language is leftover text that hasn't been removed. For homes, the credit is gone in 2026. For farm businesses, 48E is what survived.
If you want the full lay of the land on which 2026 incentives are alive, paused, or dead, see our 2026 solar-incentives guide and our FAQ.
The window on the tax-credit side is the part you can't get back. Get a free, no-pressure farm solar estimate so you know your real numbers while the 48E clock is still running.
All figures below were verified against primary sources on June 30, 2026. Each number links to its source. See our disclosures for how we handle this.
Ready for real numbers on your operation? Get a free farm solar estimate.
Educational content, not tax, financial, or legal advice. Figures are current as of the update date above; verify with a qualified professional before acting.
No. USDA stopped making new REAP grant awards in 2026. The October 16, 2024 funding notice was rescinded in a Federal Register notice published April 15, 2026, and the grant program is frozen while USDA rewrites the rules to comply with Executive Order 14315. USDA says it will announce new funding after the updated regulation publishes, and prior applicants will have to submit a new application then — but there is no published reopening timeline. REAP guaranteed loans are still open.
Yes. REAP guaranteed loans are still being accepted while grant awards are paused. A REAP guaranteed loan can cover up to 75% of total eligible project costs or $25 million, whichever is less, with terms up to 40 years and USDA guaranteeing 80% of the loan to your lender for loans approved in FY2025. Note that USDA has said ground-mount solar systems over 50 kW (and ground-mount systems that can't document historical energy use) are no longer eligible for the loan program, so rooftop and behind-the-meter projects are the safer fit.
Yes — the business credit, not the residential one. Farm businesses use the Section 48E commercial credit: a 6% base rate that rises to up to 30% with prevailing-wage and apprenticeship compliance, and a facility with maximum net output under 1 megawatt (AC) gets the full rate without that PWA paperwork. There are also +10-percentage-point adders for domestic content and for energy-community locations. The dead residential credit (Section 25D) does not apply to farm-business solar.
Yes, and it's tight. Under the One Big Beautiful Bill, a solar project that begins construction after July 4, 2026 must be placed in service by December 31, 2027 to qualify; beginning construction on or before July 4, 2026 puts you on the safer side with a longer runway. The Physical Work Test is the most reliable way to prove construction has begun. A 5% cost safe harbor exists, but its status is unsettled after a June 6, 2026 court ruling vacated IRS Notice 2025-42 (an appeal is expected), so don't rely on it — confirm your facts with a CPA. The July 4, 2026 begin-construction date itself is set by statute and unchanged by the court ruling.
That's stale boilerplate. The live IRS Residential Clean Energy Credit (Section 25D) page still carries old text saying you can claim the credit until it phases out in 2033, but the same page also states the credit is not available for any property placed in service after December 31, 2025. The One Big Beautiful Bill ended the residential credit; the 2033 language simply hasn't been removed. For homes, the residential credit is gone in 2026 — for farm businesses, the separate commercial 48E credit is what survived.
Free, no obligation, and sourced from the IRS, USDA, and EIA.