Tax Benefits (incentives and depreciation):
There are several lucrative tax benefits for businesses that decide to install solar panels. One is the Investment Tax Credit (ITC), a U.S. federal corporate tax credit that is applicable to commercial, industrial, utility, and agricultural sectors. This very generous incentive assumes 26% of the total installed system cost in 2022. The ITC is set to remain at 26% through 2022 and will ramp down incrementally through 2024 before remaining permanently at 10% thereafter. So, it’s important to act now.
Another major tax benefit is accelerated depreciation (MACRS) to reduce the overall cost of a PV installation. Because depreciation is considered an expense, having a larger amount to depreciate during the tax year results in a smaller overall tax liability. With solar, accelerated depreciation rules allow the full tax basis minus half the ITC to be depreciated over a 5-year schedule. Taxpayers are allowed to deduct a larger portion of this amount in earlier years, giving them the benefit of a greater immediate reduction in federal tax liability.
Finally, a business with a solar PV system placed in service before December 31, 2022, can elect to claim a 100% bonus depreciation. Starting in 2023, the percentage of capital equipment that can be expensed immediately drops 20% per year (e.g., 80% in 2023 and 60% in 2024) until the provision drops to 0% in 2027.
If all this accounting jargon makes your head spin (it sure does for us), we can provide your CFO or CPA with detailed guides developed by the US Department of Energy and the IRS.
Meeting Corporate Sustainability Goals:
Many corporations have sustainability mandates which can be met through the use of a variety of methods, including photovoltaic solar. If your company has goals to reach a net-zero footprint or otherwise reduce your carbon impact, solar can be a large piece of that puzzle. Houston Solar Energy is ready to help you calculate the direct environmental impact that a large-scale solar project can have on your company. Make your shareholders and investors happy by making the earth happy!