In the last decade, solar energy has been incentivized to provide a more affordable system for your commercial business. Solar installation now comes with a 30% off federal tax rebate on the system, as well as a depreciation schedule to write off the system for your business. These motivations are spurring businesses on to make the switch to solar. How could these incentives help you make the transition to renewable, free energy?
The logic that surrounds Solar energy for the homeowner, also applies for the business owner. With rising energy prices and lower solar costs, the installation of solar energy hedges the business owner from those energy costs. Simply put, the business owner must spend x amount of dollars to bring electricity into the building. Why not pay that (x) to own a system that harvests the free energy of the sun?
In the long run, smaller businesses just want their energy bills cut down a bit, and keeping the lights off as often as possible just never seems to bring the bill to swallowable size. EnergySage market data reports that the average commercial property owner in the U.S. can reduce overall energy costs by 75 percent by going solar. Going solar with your business is like prepaying 10 years of electric bills, and getting back a return of 30 years of (solar) energy. Most of today’s systems come with a 25 year warranty, and with high likelihood to remain efficient into year 35. With such a warranty, solar systems become backed and solid system guaranteed to move renewable energy into a reality of the future.
ITC 30% Tax Deduction
In addition to some of solar’s more intuitive incentives, The Solar ITC comes along to further incentivize the solar movement. The Solar ITC is a government-funded incentive come to encourage the business owner to switch to solar energy. The entire installed cost for the system (including labor, engineering, etc..) is included in the ITC tax deduction. The goal is to make solar energy more affordable, so the nationwide usage of solar energy increases. As a solar panel owner, you’re immediately eligible to a federal tax deduction for 30% of the total cost of the system. There’s no dollar cap, so whether you purchase $10,000 or $1,000,000 worth of solar panel equipment, you’ll still receive the full 30%. The Solar ITC will cover installations through 2020, and provide businesses with a sustainable energy solution. The tax deduction works in this way: A person is taxed $10,000 dollars on their wages for a certain year. That same year, they buy a solar system for $21,000. They pay the full amount to the contractor, and at the end of the year it is time they get back on that 30% tax deduction (ITC). So now, if they've paid $10,000 dollars in taxes over a years worth of paychecks, they've paid more than they owe. With the 30% ITC, they should've only owed $3,700 (the ten from a years worth of taxes minus the 30% of the system). They've already paid the $10,000, so they'll get $6,300 (the 30% of the system) back as a refund.
The write off for the commercial system also depreciates at a rate that is convenient for the company. SEIA is supporting a smart tax move that incentivizes the furtherance of solar energy. The MACRS (Modified Accelerated Cost Recovery System) works to recover some of the initial investment in which a business invests in tangible property. A solar system, of course, falls in this category. This depreciation happens over the period of time that is best for the tax schedule of the company. This program recovers the initial cost paid out for the solar system by the company. This from the SEIA: "Qualifying solar energy equipment is eligible for a cost recovery period of five years. For equipment on which an Investment Tax Credit (ITC) or a 1603 Treasury Program grant is claimed, the owner must reduce the project’s depreciable basis by one-half the value of the 30% ITC. This means the owner is able to deduct 85 percent of his or her tax basis." (Addy Electric is not a certified tax professional, and recommends that you seek the advice of your tax professional regarding the depreciation schedule of your solar system).
Solar energy comes as the answer to the question every business is asking: How do we cut down on the bills and capitalize on our earnings? With solar energy, businesses can take advantage of the oldest and most plenteous source of energy anywhere: the sun. Solar has become such a serious player in the energy conversation, that the government is funding it, and allocating for quick write offs for these systems. Addy Electric is creating a custom solar system for your commercial system. Find out how much you can save with solar today!