Your Guide to the Federal Investment Tax Credit for Commercial Solar Photovoltaics

DISCLAIMER:

 The solar tax credit information described is valid only for residents of the United States, and is generally valid for RVs that have been deemed as a second home for tax purposes. Consult your account or tax advisor to confirm if you qualify.

 Learn more about the Residential Renewable Energy Tax Credit here.

Here at Go Power!, our team prides itself on delivering the most up-to-date news and information regarding solar energy.

Today’s topic? Your guide to the federal investment tax credit for commercial solar photovoltaics. Or, how to get money from the government when you add solar to your fleet.

Let’s dive right in:

Tax Credit for Commercial Solar Photovoltaics?

Fleet owners should know that the federal United States government is offering a 26% tax credit for solar projects starting before the end of 2022.

This will proceed to a 22% tax credit for projects starting before the end of 2023, then down to a 10% tax credit for projects starting before the end of 2024.

So what do you need to know to capitalize on this ASAP? Rather than leafing through the entirety of the federal tax credit brochure, we’ve summarized the two main need-to-knows for you.

#1: What Does the Commercial Solar Photovoltaics Tax Credit Include?

This tax credit includes the following installations:

 

  • Panels
  • Inverters
  • Racking
  • “Balance of system” equipment
  • Energy storage devices
  • Circuit breakers
  • Surge arrestors
  • Step-up transformers

 

…And installation costs, sales, and applicable taxes.

 

Your credit is calculated by multiplying the applicable tax credit percentage (between 10% and 30%) by the “tax basis” of the project, which is the amount invested in eligible property.

#2: What Makes a Company or Individual Eligible for the Tax Credit?

To be eligible, your solar PV system must be used by a business subject to United States federal income taxes, must be located in the United States or a US territory, must use new solar energy systems, and not be used to generate energy for heating a swimming pool. Your installations do not need to be done on a building or property in order to be considered eligible.

While not directly linked to this tax credit, other incentives for leveraging new solar energy equipment are:

  • State and local income tax credits
  • Local property tax exemptions on your equipment
  • Taxable state or nonprofit grants
  • Loan guarantees
  • Depreciation deductions
  • And revenue from the sale of renewable energy credits

With the federal tax credit dropping 4% by the end of this year (and another 12% by the following year!) now is the time to capitalize to ensure that you and your fleet are reaping in all possible project-related benefits.

Claim the ITC Today

Ready for big savings? To claim the ITC, you must complete and attach IRS Form 3468 to your tax return.

Bookmark this blog for future reference, and be sure to check with your accounting team to ensure that your fleet has the ITC claim locked down.