Tax Credits and Incentives for Renewable Energy Sources

When deciding if a solar renewable energy source is a sound economical investment one needs to know what tax incentives and grants are available.  There are both incentives for residential homeowners and businesses as well as federal grant/loan programs specifically for agricultural businesses.  

Solar power sources are an essential part of many agriculture business models. Solar can provide reliable cost effective power to run water pumps and provide power in remote locations that would otherwise be extremely expensive to have power at.  Crop security and improving land management practices are also priorities for federal and state governments as well as reducing loads on traditional power sources for some regions.  Governments have created tax credits and business incentives that can encourage investment in a solar energy source to improve a business model while also helping government to achieve land management and energy security goals.

So what incentives and tax breaks are available?  The website to see the list is at: http://www.dsireusa.org/ but lets look at three important incentives to better understand how much capital can be reclaimed.

Business Energy Investment Tax Credit (ITC)

http://programs.dsireusa.org/system/program/detail/658

https://www.irs.gov/pub/irs-pdf/i3468.pdf

The ITC is offered for both businesses and residential homes and allows for a 30% federal tax credit for the entire cost of the system by using IRS form 3468.

Rural Energy for America Program (REAP) Grants

http://programs.dsireusa.org/system/program/detail/917

https://www.rd.usda.gov/programs-services/rural-energy-america-program-renewable-energy-systems-energy-efficiency

Rural Energy grants can provide up to 25% of the system cost in the form of a grant with a minimum grant size of $2,500.00 and a maximum of $500,000.00 for renewable grants.  Efficiency grants are also available with a minimum grant of $1,500.00 and a maximum of $250,000.00.  REAP grants provided upfront cash that can be used for the initial purchase of the system and can also provide a loan for up to 75% of the system.  

Modified Accelerated Cost -Recovery System (MACRS)

http://programs.dsireusa.org/system/program/detail/676

IRS Form 4562: Depreciation and Amortization

For a commercial solar system, using the MACRS depreciation incentive enables a business to reclaim some capital that is invested in a commercial renewable energy source by depreciating the cost of a solar asset for five years after the year of purchase.  The rate of depreciation is based on 85% of the assets value (if used with ITC) depreciated by a percentage rate that varies year to year.

2018-01-29T12:54:44-07:00

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