Commercial Solar Tax Incentives
Commercial solar tax incentives in the Carolinas include a 26% Federal ITC, Accelerated Depreciation (MACRS) plus potential state,utility and local municipality solar programs.
Commercial Solar Investment Tax Credit (ITC)
The Solar investment tax credit (ITC), also known as the Federal solar tax credit, allows Commercial solar customers to take 26 percent of their solar investment as a credit against their federal tax liability. The ITC applies to the complete costs of commercial solar systems, and there is no cap on its value (though the Commercial solar customer must have a tax liability to benefit from a tax credit).
Please note: at the end of 2020, the ITC goes down to 22% and continues to decrease in the future years. For more information on the ITC, you can go to https://www.seia.org/initiatives/solar-investment-tax-credit-itc
Accelerated Deprecation (MACRS)
Commercial clients may also benefit from accelerated depreciation (MACRS) on their Solar investment. After applying the 26% Federal ITC, 87% of the solar investment solar can be depreciated. Since the MACRS benefit is a deduction, the MACRS final cash impact depends on the companies marginal tax rate. On average, the depreciation benefit for Renu’s clients equates to ~20-25% of the costs of the system. (For more information, refer to IRS Publication 946, IRS Form 4562: Depreciation and Amortization, and Instructions for Form 4562, available on the IRS web site at https://www.irs.gov/pub/irs-pdf/p946.pdf.)