Commercial Solar Incentives
SOLAR INVESTMENT TAX CREDIT:
The solar investment Tax Credit (ITC) is one of the most important federal policy mechanisms to support the growth of solar energy in the United States. Since the ITC was enacted in 2006, the solar industry has grown by more than 10,000%-creating hundreds of thousands of jobs and investing billions of dollars in the US economy in the process. The U.S. has a long history of supporting energy infrastructure through the U.S. tax code. The market certainty provided by a long-term investment tax credit (ITC) for solar energy has supported private investment in manufacturing and project construction, a vital part in meeting our nation’s energy policy goals, driving cost cutting innovation and job growth. The Federal Income Tax Credit decreased on January 1, 2020 from 30% to 26%. The Federal Income Tax Credit decreased on January 1, 2021 to 22%. Solar deployment, at both the distributed and utility scale levels, has grown rapidly across the country. The long-term stability of this federal policy has allowed businesses to continue driving down costs. The ITC is a clear policy success story that can positively affect your businesses’ bottom line.
HOW DOES THE SOLAR INVESTMENT TAX CREDIT WORK:
The Investment Tax Credit (ITC) is currently a 22 percent federal tax credit claimed against the tax liability of a commercial businesses’ (under section 48) investors in solar energy property. In the case of the Section 48 credit, the business that installs, develops and/or finances the project claims the credit.
A tax credit is a dollar-for-dollar reduction in the income taxes that a person or company would otherwise pay the federal government. The ITC is based on the amount of investment in solar property. Both the residential and commercial ITC are equal to 26 percent of the basis that is invested in eligible solar property which has begun construction through 2019. The ITC then steps down according to the following schedule:
* 22 percent for projects that begin construction in 2021.
* After 2021 the commercial credit drops to a permanent 10 percent.
