Maximising Solar Tax Advantages

The tax advantages for commercial entities are complex, especially after passage of the 2022 Inflation Reduction Act.  Solar Lane offers expertise in tax and financing to ensure its commercial projects enjoy the maximum profitability.  Commercial projects are subject to specialized tax credits, bonus depreciation and, under certain circumstances, special labor regulations upon installation.

Tax:  The solar tax credit is 30% of project costs if the components of the solar system qualify.  For every $100,000 of the qualifying cost of the project, $30,000 can be subtracted from the current year's federal income tax.  For commercial entities, unused tax credits can be carried forward for 22 years; or carried back for up to three years. Bonus depreciation for solar equipment falls under the 5 year IRS MACRS schedule.  Both tax credits and bonus depreciation are subject to limitations on the type and source of the equipment used.  In certain circumstances the labor standards followed by the installing solar contractor can affect these tax advantages.   State tax credits are also available, usually under similar conditions established for federal tax advantages.  Solar Lane offers specialized expertise in the tax advantages offered by solar installations.

Financing.  We at Solar Lane have access to financing entities focused on solar, although we often find our customers do very well financing their own projects.  For certain companies, the PACE program, approved by the Maryland legislature, offers favorable upfront financing for commercial solar projects. PACE can fund projects with no out-of-pocket costs and extend terms up to 20 years. The annual energy savings can exceed the annual payment enabling an immediate positive cash flow.