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 30% of the total installed system cost for systems up to 1 Megawatt with incremental provisions applicable to larger systems that can also add up to 30% or more regardless of the system size. The ITC is set to remain at 30% through 2034.
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, 2026, can elect to claim bonus depreciation. The percentage of capital equipment that can be expensed immediately is on a declining scale (80% in 2023, 60% in 2024, 40% in 2025, and 20% in 2026) 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!