Both environmentalists and businesses have welcomed solar energy as an effective form of renewable energy. As a result, the federal government has put tax incentives in place to support the deployment of solar energy in the United States.
One of the most important mechanisms to grow solar energy resources is the solar Investment Tax Credit (ITC), also known as the Section 48 tax credit for commercial properties. This green tax incentive is beneficial for businesses working to improve their tax budgets.
By allowing businesses to maximize tax savings, the solar ITC is a valuable opportunity for companies that are considering making an investment in solar energy or have recently done so. These three key factors of the solar ITC provide more insight into how submitting for this green building incentive benefits your business.1. The Solar ITC Provides A 10%-30% Tax Credit
Project owners and investors who install renewable-energy equipment are eligible to claim tax savings through the solar ITC. The value of your tax credit is based on how much you have invested in solar property.
In order to lower the cost of financing renewable energy equipment, the federal government specifies that this green building tax incentive shall provide a 10% to 30% tax credit to owners or long-term lessees for the cost of energy resources that generate electricity, light or solar-process heat.
2. Utility-Scale, Commercial And Residential Projects Qualify For The Tax Credit
The Section 48 tax credit is available to companies that install, develop or finance a renewable energy project. For both commercial and residential properties, the ITC is equal to a substantial portion of your investment.
Solar energy is a sensible option for businesses seeking a less expensive way to provide electricity, light or heat to their building. Once you have made the initial investment, your solar panels draw renewable energy from the sun at no cost.
If your business is considering an investment in solar energy, a 30% tax credit to fund installation is a beneficial solution that helps you maximize tax savings.
3. The Solar Investment Tax Credit Is Available Until December 31, 2016
By claiming your credit through the solar ITC green tax incentive before January 1, 2017, you have the potential to substantially increase your tax savings. On this date, the commercial tax credit will drop to a 10% value and the residential credit will no longer be available.
Congress may potentially extend this deadline or change components of the law that allow businesses to claim the 30% credit after December 31, 2016. The law currently specifies that renewable energy equipment must be “placed in service” before the 2017 deadline.
If Congress alters the language so that equipment must “commence construction” before 2017, more businesses have the potential to qualify.
Not only is solar energy a beneficial investment that allows you to save money on electricity, but submitting for green building incentive tax credits allows you to maximize tax savings. Businesses that have recently implemented solar energy equipment are at a significant advantage.
Green tax incentives are just one of the solutions businesses find helpful in improving their tax budgets. Tax incentive programs such as the WOTC and R&D credits are worth researching and discussing with a tax advisor when developing a comprehensive tax strategy.
Ready to learn more about corporate tax incentives that benefit your business? Discover whether your business is eligible to claim R&D credits by taking a free quiz. 
