Federal Tax Credits for Commercial Solar Photovoltaics

Tax Credits For Going Solar!


OK, your business wants to go solar, but you are hit with the costs of converting from traditional system to solar. The Federal government is actually helping businesses to make this jump but like any government program there are rules you need to follow. The information below is from the U.S. Department of Energy as a guide to helping you determine if you are eligible and the requirements you must meet.

The solar investment tax credit (ITC) is a tax credit that can be claimed on federal corporate income taxes for 30% of the cost of a solar photovoltaic (PV) system that is placed in service during the tax year.

There was an extension passed providing up to 26% for system constructed in 2022, 22% for systems constructed in 2023, and 10% for construction after 2024 and beyond.

Typically, a solar PV system that is eligible for the ITC can also use an accelerated depreciation corporate deduction.

Project Eligibility:

The system must be used by a business subject to U.S. federal income taxes and not a charity or not-for-profit organization.

The business must be located in the United States

The system must be new and not a used system to qualify

The system cannot be used to heat a swimming pool (yes that is actually in there!)

Eligible Expenses Include:

Solar PV panels, inverters, racking, balance-of-system equipment, and sales and use taxes on the equipment

Direct and indirect cost of installation

Step-up transformers, circuit breakers, and surge arrestors

Energy storage equipment (if charged by a renewable energy system more than 75% of the time)

The net impact of depreciation deductions is calculated as: 0.21 * ($356,000 + $106,800) = $97,188

 

You Need to Claim the Credit:

It is not automatically triggered by buying a unit or starting a construction project. To claim the tax credit, you must complete and attach the IRS Form 3468 to your tax return. Help and steps are available at http://www.irs.gov/pub/irs-pdf/i3468.pdf

  

Any Other Help:

We spoke to Tim Woods, owner of Biz-Reps a manufacturer’s rep for manufacturers of solar products including lighting, solar panels, etc. He stated that they offer a free list of SolarTax Credits for Federal and State locations and is available at no charge if a site visitor requests the information. Their address is listed below.

  

Many Thanks to Biz-Reps for their input and the free listing of available tax credits. www.biz-reps.com


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