It’s no secret that the federal government and many state governments want businesses to go solar. Often this desire is expressed in the form of valuable tax incentives.
Federal Solar Investment Tax Credit (ITC)
The Solar ITC was implemented in 2006 as an added incentive for businesses and homeowners to install a solar system. Through the end of 2019, business owners can claim 30% of the cost of their systems as a federal income tax credit which is available immediately in the tax year when the project is completed. That percentage reduces to 26% in 2020, 22% in 2021, and then 10% from 2022 on. If you’re thinking of switching to solar power for your business, now is the time!
Solar tax incentives
Most states offer their own regional programs to encourage commercial enterprises to move to solar energy. Your solar provider can help inform you if and when State tax incentives for solar (in addition to the Solar ITC) may be available. State legislation varies and can change frequently, so make sure you are aware if any such incentives apply towards a project in your state.
Additional incentives are offered that continuously push the prospect of solar for your business further into reach. MACRS is a method of depreciation in which a business’ investments in certain tangible properties are recovered (for tax purposes) over a specified time period through annual deductions.
This form of accelerated depreciation allows businesses to recoup a certain percentage of capital costs over the property’s lifetime. This includes your newly purchased solar panels, which qualify as a form of capital expenditure. Allowing businesses to deduct the depreciable basis for up to five years decreases tax liability and gives you a boost on your ROI.
Why solar power now?
In addition to federal and state tax incentives, solar power for your business means:
- Reduced electricity bills and operating costs
- Immediate beginning of payback on investment
- The ability to capitalize on net metering programs (available in most U.S. regions)
- A clean, renewable energy source that benefits our environment
- Control of your energy supply; less dependence on your electric company and its power grid
- Enhanced brand reputation as a business that supports clean energy
You can get more details on solar investment tax incentives in your state and other tax incentives by speaking with a knowledgeable solar installer or provider. If you live in Minnesota, Iowa, Massachusetts, New Hampshire, New York, or Wisconsin, an All Energy Solar representative can help you find the most valuable tax incentives for your business.
Download our eBook, Solar for Business, to learn more about how your business can benefit from solar energy.