Federal Commercial Solar Incentives

Investment Tax Credit

The Investment Tax Credit is a 30% Federal credit that can be claimed against the tax liability of Residential and Commercial Solar system owners. The Credit is equal to 30% of the value of the system after all state incentives have been deducted. 

The ITC is currently at 30% but will step down to 26% in 2020. In 2021 it will step down again to 22%, and then again to 10% in 2022. 

The ITC is one of the most valuable Solar incentives so it is worth noting that it would be ideal to get this one while it is at it’s peak. 

Modified Accelerated Cost Recovery System ( MACRS) Section 179 Depreciation

Modified Accelerated Cost Recovery System ( MACRS) Section 179 Depreciation  

Depreciation is the reduction in the value of an asset over time due to wear and tear. Business owners are allowed to deduct this loss in value from their taxable income when the asset is used for you business.

Qualifying solar systems are eligible for a cost recovery period of depreciation of five years.

Should your business decide to claim the ITC it will affect your ability to depreciate your system.  You will have to reduce the amount of your  depreciation by one half the value of the 30% ITC, so you’ll only be able to depreciate 85% of the total value of your solar system.

New legislation allows for bonus depreciation. This allows businesses to elect to depreciate 100% of the cost of their system within the first year.

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