Using the federal Business Energy Investment Tax Credit, businesses can essentially receive a rebate for 30% of all solar, fuel cells, and small wind equipment installed on their commercial properties. For energy efficient equipment outside of that scope, a 10% credit is available, particularly for geothermal, microturbines, and CHP equipment.
Recently, the most popular method to generate a tax credit and create a more energy efficient property is with solar energy equipment, such as solar panels. The IRS describes eligible solar energy property as equipment that uses solar energy to generate electricity, to heat or cool a structure, or to provide solar process heat. Hybrid solar lighting systems using fiber-optic distributed sunlight are also eligible.
There is no limit to the amount of credit that can be taken for the purchase of the described equipment, allowing your business to take advantage of the full 30% credit related to your energy efficient purchase (or 10% depending on equipment type). Your tax credit is based on the purchase price of the equipment, net of any promotions or manufacturer rebates, and a carryover to future years is allowed if the credit cannot be fully utilized in the year it originates.
The solar tax credit is available through tax year 2019, and is set to phase out in following years. Please note that the tax credit is only available when the solar power installation is purchased.
If you’re considering installing energy efficient equipment in your commercial property, be sure to take advantage of all available credits. Contact your L&B professional for more information.