Commercial Solar

30% base Investment Tax Credit (ITC) with adders (see below). The ITC is good through 2032 and will then step down to 26% in 2033, 22% in 2034 and phased out in 2035. It is a dollar-for-dollar reduction in the income taxes that a person or company claiming the credit would otherwise pay the federal government. The entire cost of your solar PV system, materials, labor, permits and any related electrical work necessary for the installation is eligible. Re-roofing does not qualify. Adders:

• Domestic content minimums: additional 10%
• Siting in “Energy Community”: additional 10%
• Allocated (based on an application and award process) for low-income housing: 10-20%

The commercial ITC allows for ‘Direct Pay’ for tax-exempt organizations, which makes this tax credit feel more like a rebate.

• An accelerated asset depreciation schedule (5 years) allows the site owner to reduce their taxable income by the amount paid for the PV system. The sum of this deduction is calculated by multiplying the system amount by the business’s tax rate.
• For equipment on which the 30% ITC is claimed, the owner must reduce the project’s depreciable basis to half of the ITC’s value.

• There is no sales tax on systems under 100 kW AC (based on the inverter’s combined output rating)
• 50% rebate on systems 101 – 500 kW AC

Net Metering, an incentive available since 1996 and extended in 2019, is a contract you sign with your electric utility, allowing you to trade power with them at retail rates. When you produce more energy than you consume (running your meter backwards), the excess kilowatt-hours (kWh) are fed into the grid and credited to your account. When you produce less than you consume, you use the credits you’ve built into your account.

• Available up to 100 kW AC
• Power Purchase Agreements must be made for systems >100kW AC

• USDA REAP Grants are available for agricultural producers who earn at least 50% of their gross income from farming operations and small businesses in rural areas. REAP grants cover up to 50% of the project cost, and loan guarantees cover up to 75%.
• Dept of Commerce

• Solar plus Storage for Resilient Communities
• Energy Programs in Communities (EPIC)

The tax incentives for solar can offset from about 40% to nearly all of the system cost. That said, professional tax advice is necessary to navigate the tax code adequately.