Commercial Solar Tax Credit

The commercial solar tax credit can save your business money on taxes and help you go green with renewable energy. Solar energy is a clean, renewable resource that can help reduce your carbon footprint. With the federal solar tax credit and other solar incentives, you can get up to 70% of the project costs back.

Get Paid to Go Solar!

The commercial solar tax credit lets business owners recoup a portion of the cost of installing a solar system and energy storage. This federal tax credit can be worth up to 30% of the total cost of the system, making clean energy an attractive and financially viable option for business owners.

Now is the time to take advantage of this credit and see significant savings on your energy costs. Solar energy is a smart investment for your business, so don’t wait any longer. Contact us today and we’ll help you get started.

Business Solar Tax Credit

The Inflation Reduction Act of 2022 expanded and increased the commercial solar tax credit known as the Federal Business Energy Investment Tax Credit (ITC). The credit is in section 48 of the Internal Revenue Code.

Projects under one (1) megawatt (MW) that have commenced construction before the 2025 tax year will receive the full 30% income tax credit. Projects over one (1) MW that are commenced before December 31, 2024 can receive the full 30% tax credit if they meet certain labor requirements.

Labor Requirements

The labor requirements for tax credit are:

• All laborers and mechanics involved in the physical work of the construction must be paid prevailing wages.
• All laborers and mechanics involved in the maintenance of the project for 5 years after completion must be paid prevailing wages.
• A percentage of total labor hours must be performed by qualified apprentices.

Domestic Content Bonus Tax Credit

The Domestic Content Bonus tax credit is up to 10% of the total system cost. Projects qualify for the full 10% credit if:

• They meet the labor requirements stated above, and
• 100% of the steel or iron used was produced in the United States, and
• 40% of the components were produced in the United States.

Projects that don’t meet the labor requirements qualify for a lowered 2% tax credit.

Energy Community Bonus Tax Credit

The Energy Community Bonus Tax Credit is up to 10% of the base credit amount, not the total system cost. Projects qualify for the full 10% credit if they:

• Meet the labor requirements stated above, AND
• They are located at:
• A brownfield site, or
• A metropolitan or non-metropolitan statistical area which has: (1) a 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas, or (2) an unemployment rate above the national average for the previous year, or
• A census tract or a census tract that is adjoining a census tract in which a coal mine has closed after 1999 or a coal-fired electric generating unit was retired after 2009, and

Projects that don’t meet the labor requirements qualify for a lowered 2% tax credit off the base credit amount

Low-Income Bonus Tax Credit

The Low-Income Bonus Tax Credit is up to 20% of the total system cost. Projects must be less than 5 MW to qualify. Projects can qualify for the full 20% credit if they are associated with a low-income residential building project or a low-income economic benefit project. Projects can qualify for a 10% credit if they are built in a low-income community as defined by the New Markets Tax Credit or on Indian Land.

Credit Monetization

Section 13801 of the Inflation Reduction Act of 2022 allows for monetization of the commercial solar tax credit. The Direct Pay option allows non-taxable entities do receive refunds on the tax credit. This applies to the following companies:

• Nonprofit organizations
• State or political entities
• Tennessee Valley Authority
• Indian Tribal Governments
• Alaska Native Corporation, or
• Any corporation operating on a cooperative basis which is engaged in furnishing electric energy to persons in rural areas

These entities can act as if the commercial solar tax credit was a payment made to the IRS. They can then claim a refund for the excess taxes they are deemed to have paid.

Eligible entities can also transfer all or a portion of their tax credits to an unrelated taxpayer.

Eligible Property

The following energy property is eligible for the commercial solar tax credit:

• Solar Technologies
• Fuel Cells
• Wind Turbines
• Geothermal Systems
• Microturbines
• Combined Heat and Power (CHP)
• Offshore Wind
• Waste Energy Recovery
• Energy Storage Systems, both paired with generation and installed as a stand-alone system
• Thermal Energy Storage Systems
• Qualified Biogas Property
• Microgrid Controllers
• Interconnection Property associated with the installation of energy property

Don’t miss out on this opportunity to lower your business taxes and invest in renewable energy. Contact us today to learn more about how we can help you take advantage of this tax credit.