Looking to finally purchase that EV or install solar panels in your home? Luckily for you, there are a variety of tax incentives available for investing in renewable energy solutions. In this post, we’ll discuss some of the specific incentives that can help you save money on your taxes while also promoting a more sustainable future.
Federal Tax Credits: As mentioned in the previous section, the Investment Tax Credit (ITC) for solar is one of the most lucrative credits available for investing in renewable energy. This credit is available for both residential and commercial properties and provides a credit for 26% of the cost of the solar installation. The ITC is set to expire in 2023, so now is the time to take advantage of this incentive.
State and Local Incentives: In addition to the federal tax credit, many states offer their own incentives for investing in renewable energy. Here are some examples:
New Jersey: The state offers a range of incentives for renewable energy, including a rebate program for residential solar installations that can cover up to 15% of the system cost. The state also has a program called the Clean Energy Program that offers rebates for commercial and industrial properties that install solar, wind, or combined heat and power (CHP) systems. In addition, New Jersey offers a sales tax exemption for solar energy systems, making it even more cost-effective to invest in renewable energy.
New York: The state offers a program called NY-Sun that provides incentives for solar installations, including a rebate program for residential properties and a program for commercial and industrial properties that provides up-front incentives for solar projects. New York also offers a property tax abatement for solar energy systems, which can help reduce the cost of investing in renewable energy.
Pennsylvania: The state offers a grant program for renewable energy projects called the Alternative and Clean Energy Program. The program provides grants for a variety of renewable energy projects, including solar, wind, and geothermal installations. In addition, Pennsylvania offers a net metering program that allows property owners with renewable energy systems to earn credits for excess energy that they generate and send back to the grid.
Business Tax Incentives: Business owners can benefit from a range of tax incentives for investing in renewable energy. In addition to the federal ITC, business owners can take advantage of the Section 179D tax deduction, which provides a deduction of up to $1.80 per square foot for installing energy-efficient lighting, heating, and cooling systems. Business owners can also benefit from accelerated depreciation schedules for renewable energy systems, allowing them to recover their investment more quickly. In addition, businesses can earn tax credits for investing in research and development related to renewable energy technologies.
Charitable Donations: Charitable donations to renewable energy organizations can also provide tax benefits for high-income earners. Donations to organizations that promote clean energy solutions can provide a tax deduction, with the amount of the deduction depending on the individual’s tax bracket and the value of the donation. Donations to organizations like the American Council for an Energy-Efficient Economy or the Natural Resources Defense Council can help support the development of new technologies and initiatives.
Electric Vehicles (EVs): In addition to incentives for investing in renewable energy, there are also tax incentives available for purchasing electric vehicles (EVs). The federal government offers a tax credit for EVs, with the amount of the credit depending on the battery size of the vehicle. In addition, many states offer their own incentives for EVs.
At Shah Tax & Accounting Services, we can advise on which incentives you can benefit from, not just while we support your tax filing, but also as strategic thought partners while you assess renewable energy solutions for your personal or business use. Call us today for a consultation, we’re here to help you define and attain your financial goals.
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