Now that we’re six months into 2023, business owners and commercial property owners may have heard talk about the “Inflation Reduction Act,” signed into law in August 2022. The Act, on top of lowering prescription drug costs, health care costs, and more, also decreases consumer energy costs, increases energy security, and helps reduce greenhouse gas emissions. For individuals and businesses, these provisions come with some hefty incentives for renewable energy use.
Keep reading to learn more about the Inflation Reduction Act and what it means for commercial solar installation, other types of commercial solar incentives for businesses, and more.
About the Inflation Reduction Act
The biggest thing that businesses need to be aware of — as it pertains to solar incentives — is that the Inflation Reduction Act takes major steps to reduce the costs of going solar, both for individuals (homeowners) and businesses.
Previously, the “Investment Tax Credit” helped homeowners and businesses claim a certain tax credit percentage, based on the year in which the solar system was installed. Through the end of 2022, that credit was set to be 26%; for 2023, that amount was set to drop to 22%; and for 2024 and beyond, only commercial projects would be eligible for a 10% credit.
The Inflation Reduction Act turned that all upside down, much to the benefit of would-be solar customers — individuals and businesses alike.
Thanks to the Inflation Reduction Act, the Clean Energy Tax Credit will subtract 30% of the cost of installing solar heating, electricity generation, and other solar products from federal taxes. The credit will be available to taxpayers through 2033, which means homeowners have plenty of time to consider their solar installation options.
Save Money With Commercial Solar Incentives
Solar panels themselves aren’t the only thing covered by the 30% tax credit. According to the Department of Energy, the following solar equipment will also be covered:
- Solar photovoltaic (PV) panels.
- PV cells used to power an attic fan (but not the fan itself).
- Contractor labor for onsite preparation, assembly, or original installation.
- Permitting fees, inspection costs, and developer fees.
- All equipment needed to get the solar system running, including wiring, inverters, and mounting equipment.
- Storage batteries. (You can claim the tax credit for these even if you buy and install them a year or more after you install the solar system.)
- Sales taxes on eligible expenses.
Sounds too good to be true, right?!
Let’s take a look at a made-up scenario to explain how exactly the 30% tax credit works.
Imagine the total cost of your commercial solar system is $50,000. Thanks to the tax credit, you would pay 30% less in taxes — so you would be saving $15,000. It all depends on the cost of your system. The more expensive your system, the more money you’ll save.
One thing to note: This is a dollar-for-dollar credit toward your income taxes that would otherwise go to the federal government. You’ll only be able to claim that credit if you are operating with a tax liability at the time of filing. In other words, you need to “owe” the government money.
If you are going to be getting money back on your tax return because the government owes you money, you won’t be able to apply the tax credit to that year. Instead, it will roll forward to the next year you are eligible. Be sure to work with your business’s financial advisor to ensure you’re getting the most from this tax credit.
Keep in mind that this particular tax credit isn’t in danger of decreasing on a yearly basis like the previous Investment Tax Credit. But despite that, it’s still better to install it sooner rather than later. That’s because the sooner you invest in solar for your business, the sooner you’re able to start seeing results when it comes to saving money. And the longer you’re able to enjoy the benefits of commercial solar.
Also, with how sweet this deal is for businesses, many solar companies are seeing their calendars fill up to the point that some are no longer taking new customers. Be sure to act soon if you want to start reaping the benefits of commercial solar installation and commercial solar incentives. And you can always give us a call for a free, no-pressure quote.
Save Money With the Power of Solar
Not only will you save money on the cost of your solar system, but your business will benefit from all the good things that go along with being a solar commercial property.
As soon as you work with a commercial solar installer to get your solar panels up and working, your cash flow can immediately improve. That’s because you’ll start seeing those reduced monthly electric bills as soon as your system is installed.
This makes commercial solar installation a “cash-flow positive” investment. That’s because the gains of your investment will outweigh the initial costs.
Whether your commercial property is an office building, an apartment complex, or something else, it most likely needs a lot of energy to operate at its best. When you’re saving money on electricity, month after month, you’ll find that your commercial property’s operating costs decrease. Studies have shown that “Green” buildings can decrease the costs of operation by $50 to $70 per square foot.
In fact, going solar can do more than just decrease your monthly operating costs. In fact, it’s one of the best ways you can protect yourself against the rising costs of electricity. With solar panels, you can lock in the cost of your monthly energy bills. The stable monthly payments help you avoid financial surprises.
Energy costs are rising quickly. Between 2010 and 2020, electricity costs increased by 30%, according to the U.S. Energy Information Administration.
The great news is that installing solar panels can help keep your commercial building’s energy costs fixed for years to come. With a stable monthly electricity budget, you can divert your energy savings toward other areas of your business.
Ready to Get Started? Let’s Talk About How You Can Go Solar
If you are looking for the best solar company in Kansas City, look no further than KC Solar. They are your local Kansas City solar panel installation experts. Once you schedule a no-pressure site visit, our experts will help you understand what solar system specifications would be best for your home or business. And exactly how those commercial solar incentives work.
KC Solar is a local company made up of KC natives with KC pride — in our city, and in our work. Which means we’ll always give you the best of ourselves.
And be sure to download our Free Solar Panel Buying Guide for more information.