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How the Federal Solar Tax Credit Can Benefit Your Business
Since 2008, the U.S. Energy Policy has provided a percentage in tax credits as an incentive for solar panel installation. As of January 1, 2021, all businesses that install solar panels by the end of 2022 will receive a tax credit equal to 26% of the cost of your solar installation. This tax credit is applied to the company’s federal income taxes and can significantly reduce or eliminate what is owed back to the government.
What You Need to Know About the Federal Solar Tax Credit
Before jumping into solar panel installation, here are a few things you should know about the federal solar tax credit:
- The federal solar tax credit is also known as the Solar Investment Tax Credit or ITC.
- The ITC was first enacted under the Energy Policy Act of 2005 as a 30% credit; it was extended in 2008 due to its popularity and again in 2015.
- However, under the latest extension, the credit is set to lower as time goes on:
- 2016 – 2019: The tax credit remained equal to 30%.
- 2020 – 2022: The tax credit will fall to 26%.
- 2023: The tax credit will fall to 22%.
- 2024 and beyond: The tax credit will fall to 10% for commercial solar owners only.
How Does the Federal Solar Tax Credit Work?
Until 2023, commercial building owners can receive a federal tax credit of 26% of the total cost of solar panel installation.
For example, the average price of a 5 kilowatts (kW) solar system in New Jersey costs $13,950. The credit for this installation would be 26% of $13,950, or $3,627. Now, the total cost of installation is only $10,323.
To claim this credit, complete and submit the IRS Form 3468 when filing your company’s federal income taxes.
Is Now the Right Time to Install Solar Panels?
According to the Energy Policy Act, now is the best time to install a solar system for your commercial building; this current period boasts the most credit your business will receive for solar panel installation.
For more information on how solar panels work and their benefits for commercial buildings, click here.
The First Step to Install Solar Panels
What many property and building owners do not know is that there are steps that need to be taken before solar panels can be installed on a commercial roof. First, the roof must be “solar ready.” This means your commercial roofing company needs to perform a ThreatCheck inspection of the roof to determine if any repairs or replacements need to be performed before solar panels can be installed. Without this crucial first step, you may not get a full life cycle out of your solar panel investment.
What PB Roofing Can Do for Your Commercial Building
As a property or building manager, you must know who performs what during a solar system installation. At PB Roofing, we can perform a ThreatCheck inspection for your commercial building and provide preventative maintenance after the solar panels are installed. We also work alongside solar consulting firms and installation companies, so you don’t have to worry about finding a reputable installer. We can also help you navigate the ITC and answer any questions you may have.
For more information regarding solar panels, contact PB Roofing.