The solar Investment Tax Credit (ITC) has been one of the largest federal policy mechanisms to support solar energy initiatives in the U.S. The solar ITC offers a substantial 30% tax credit for investing in solar systems for commercial property under Section 48.
Since the ITC was implemented in 2006, solar installation has experienced a compound annual growth rate of 76 percent. The Section 48 commercial ITC is used for utility-scale, commercial and residential sized projects. By installing, developing or financing a project, upon completion, your company may qualify for the 30% solar ITC.
While many companies have benefitted from the eight-year extension of this tax credit, it is currently only set to exist until December 31, 2016.While the Solar Investment Tax Credit has seen bipartisan support in the past, it was recently excluded from a tax extender bill featuring over 50 other corporate tax credits and incentives. Some industry detractors and GOP lawmakers who aren’t in favor of this tax credit are putting up a fight to keep the expiration date.Act Now To See Larger Tax Savings From Your Green Building Efforts
On January 1, 2017, the solar ITC is set to drop from 30% to 10% as part of a phase-out plan. While the upfront investment in a solar energy system is a top concern for business owners, the ongoing long-term expense is next to nothing as solar panels require little-to-no maintenance.
That’s why it’s important for your business to consider installing solar equipment now, so you secure the maximum dollar-for-dollar reduction on your income taxes.
With over a year left before the solar ITC expires, there’s still time to implement eligible solar energy equipment into your property and receive the tax credit. Eligible solar equipment includes the following:
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Equipment that uses solar energy to generate electricity
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Equipment used to heat or cool (or provide hot water for use in) a structure
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Equipment used to provide solar process heat
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Hybrid solar lighting systems, which provide indoor illumination using fiber-optic distributed sunlight
The only systems not eligible for this tax credit are passive solar systems and solar pool-heating systems.
Develop A Sound Solar Strategy With A Section 48 Tax Expert
The solar ITC offers you market certainty through 2016 for the investment made in installing a solar energy system. Also, by implementing this green building initiative now, you are able to lower your utility bills and control future energy price spikes.
Because time is running out, it is recommended to work with a tax consultant who is experienced in green building incentives and the intricacies of ITC Section 48. While helping you develop a practical plan to complete your solar system installation, your tax consultant documents and reports accurate information for the IRS, so you receive the most tax savings for your investment.
Ready to learn more about the solar Investment Tax Credit? Schedule your 30-minute, no-cost consultation with a tax expert at CTI today.
