In the ever-evolving landscape of sustainability, businesses are increasingly turning to solar energy solutions to not only reduce their carbon footprint but also to make sound financial decisions.
A tip from commercial solar companies in Texas, understanding and leveraging the array of tax credits and incentives available can significantly enhance the return on investment.
In this article, we will shine a light on key opportunities, including federal incentives like the Investment Tax Credit (ITC) and Modified Accelerated Cost Recovery System (MACRS), as well as unique provisions in Houston.
The Investment Tax Credit (ITC) has undergone a positive transformation with the Inflation Reduction Act (IRA) of 2022, offering commercial businesses an enticing 30% credit on the total cost of solar photovoltaic (PV) systems.
Unlike tax deductions, the ITC directly offsets tax liability dollar for dollar. The IRA has extended the carry-back and carry-forward periods, providing flexibility in optimizing financial benefits.
For larger PV projects exceeding 1 MW AC, the IRA introduced prevailing wage and apprenticeship requirements to qualify for the full 30% “increased rate,” incentivizing businesses to invest in training and workforce development.
The Modified Accelerated Cost Recovery System (MACRS) allows businesses to recover solar PV property investments through depreciation deductions over a 5-year period. The Tax Cuts and Jobs Act of 2017 introduced bonus depreciation, enabling businesses to deduct the entire tax basis of the system in the first year of operation. For projects placed in service in 2023, 80% of the basis can be deducted in the first year.
These federal tax incentives, including the bonus depreciation, expedite the recovery of solar investments, making commercial solar arrays more financially attractive.
Houston, a thriving commercial hub, introduces a unique incentive for solar generation projects. When placed in service after December 31, 2022, and located within an “energy community,” businesses qualify for an additional 10% ITC. An energy community encompasses various sites, encouraging businesses to revitalize areas such as brownfield sites or locations with significant employment related to energy extraction.
Emphasizing the support of domestic manufacturing, solar generation projects placed in service after December 31, 2022, can benefit from an extra 10% ITC by meeting a new domestic content requirement. Businesses must certify the use of American-made components, promoting the use of local materials and products.
Embracing solar energy not only aligns commercial businesses in Houston with sustainable practices but also unlocks substantial savings through federal and local incentives. As the transition to renewable energy becomes increasingly vital, these incentives make the choice to adopt solar panels a win-win scenario, contributing to a greener planet while fortifying the bottom line.
For businesses in and around Houston, these incentives are a beacon, guiding them towards a future where sustainability and financial prudence go hand in hand. If you are considering a commercial solar array, reach out to your local experts, like our Cinco Ranch solar company, for a comprehensive consultation. Illuminate your business’s path to a greener and more economically resilient future.
We are local solar installers, local Cinco Ranch solar installers, with the experience and know-how to bring your solar project to light. Contact us today.
