Finding ways to minimize your taxes as an individual and business can be daunting. When reviewing options with your CPA, you are probably covering the basics of tax minimization strategies, however, have you ever considered implementing something that is sustainable, good for the environment and your taxes?The solar Investment Tax Credit (ITC) is a 30% Federal tax credit for solar systems on residential (under Section 25D) and commercial (under section 48) properties that under current law remains in effective through December 31, 2016.
The solar Investment Tax Credit (ITC) is a 30% Federal tax credit for solar systems on residential (under Section 25D) and commercial (under section 48) properties that under current law remains in effect through December 31, 2016.
How does the solar investment tax credit work?
Remember that a “tax credit” is a dollar-for-dollar reduction in the income taxes that a person or company claiming the credit would otherwise have to pay the government. These four reasons can help you uncover why you may want to implement solar into your operations:
- The Federal Investment Tax Credit is reducing in 13 months. Currently, every commercial solar project is eligible for a 30% federal tax credit. At the end of 2016, this credit will be reduced to 10%.
- Electricity costs are starting to increase exponentially. Knowing that the cost of energy will rise, why not use a resource that has zero costs associated with your residential or commercial property? Installation costs for solar have leveled off. Being a late adopter has its benefits in this case. You can view this as an opportunity to take control of your energy costs.
- USDA REAP grant program. This USDA program assists agricultural users who install solar on their farm. Having someone help you navigate the complexities can alleviate the administrative burden so that you can spend time doing what you love.
- Solar is financially beneficial in multiple ways. The commercial solar market has seen an increase in financing options for companies that want to install solar. This may include capital or operational leases, power purchase agreements (PPA), and construction loans. These incentives can help make your project’s cash flow position from the start.
Business Savings Example
|Improvement costs for business||$100,000|
|Federal Tax Credit||$30,000|
|Energy Trust of Oregon Cash incentive||$32,650|
|REAP Grant (25% of project cost)||$25,000|
*Although you don’t receive dollar for dollar savings in the current year, you can work with your tax professional to decide when to use the credit to maximize your tax savings strategies.
According to the Solar Energy Industries Association, investing in renewable energy can play a vital role in spurring economic growth, ensuring U.S. global competitiveness, lowering energy bills for consumers and businesses and reducing pollution. Our team is passionate about helping our clients find ways to help you achieve your goals. If you would like to further discuss the benefits of implementing solar into your business, please feel free to contact our agribusiness team.