federal tax credit

Solar Tax Credit Extended Through 2023: Benefits, Requirements, and Opportunities

Installing solar panels is a decision where owners consider the pros and cons in great detail. However, the installation cost was undoubtedly the main deterrent to taking the plunge. Fortunately, in 2022, the Inflation Reduction Act included a Solar Investment Tax Credit (ITC). The ITC is an incentive the government offers businesses to switch to alternative energy forms through considerable taxes reductions. However, its maximum credit percentage (30%) could only be enjoyed until December 2022. But don’t worry! If you have yet to make the installation. We have good news; the government announced the extension of SITC for 2023; stay with us and discover all the opportunities you could take advantage of. Let’s get started!

1. What is the Solar Tax Credit?

The Solar Investment Tax Credit is a government incentive, which implies a percentage reduction in the amount to be paid by the taxpayer in his income tax return. To do so, property owners must purchase and install photovoltaic systems. According to EPA, by 2017, the United States generated 15% of the greenhouse gases emitted globally. So, its purpose is that more and more people join clean and sustainable energy programs.

Here are the Solar Investment Tax Credit benefits!

  • You get a 30% credit calculated according to the total cost of the solar panel installation. • The credit can be claimed in the tax year of the equipment installation.
  • The amount is calculated considering the system equipment costs, wiring, hardware, energy storage, installation, and labor costs.

Why adopt electric energy in your business?

  • Electric bill savings: businesses generate power and reduce dependence on electric power.
  • Increased energy resilience: businesses get a reliable and stable power source unaffected by power outages or blackouts. This is useful during hurricanes, storms, or emergencies.
  • Environmental sustainability: reduces greenhouse gas emissions and dependence on fossil fuels.
  • Improving company image demonstrates a commitment to environmental sustainability and social responsibility.


2. Solar Energy Tax Credit Extension

The reason behind the extension of the solar tax credit in 2023 is due to the excellent response of property owners in the last half of 2022 to switch to renewable energy sources, in which the number of people installing PV systems increased. Therefore, the legislators decided to extend the duration of the 30% credit, which will start to decrease from next 2024. The idea is to reduce dependence on electric power by 2035, with a definitive integration to clean energy programs. The extension shows the government’s support by reimbursing taxpayers dollar for dollar and alleviating the impact on their pocketbooks to optimize their operations sustainably.

The key benefits of the Solar Energy Tax Credit Extension are:

  • Return of at least 30% of the investment.
  • Use of alternative energy sources.
  • Reduced carbon footprint
  • Efficient and less dependent energy consumption.


3. Benefits of the Solar Tax Credit Extension

Beyond the great benefit to the planet in terms of reducing greenhouse gas emissions from the use and production of electric power, fossil heat sources, and those industrial processes, there are also significant financial benefits that commercial and residential building owners can enjoy:

  • If your PV system costs $16,000, the government reimburses you through a tax credit of $4,800.
  • You pay a lower amount on your income tax return this year.
  • If the amount of the credit exceeds your return, you can enjoy the difference in the following year.


4. Requirements for Claiming the Solar Tax Credit

Eligibility criteria for individuals and businesses to claim.

  • You must acquire a solar panel system for your commercial or residential property by December 31, 2023.
  • You must be the sole owner of the solar panel equipment.
  • The property and the system must be located within the United States.

Other requirements to consider.

  • The solar panel system you purchase must be capable of providing power to the entire property.
  • The installation of solar water heaters can be included to claim the tax benefit; these have a solar collector and a tank to use thermal energy to heat the water.
  • Certified companies must install photovoltaic systems.

Documentation for the application

  • With your income tax return file, include form 5695.
  • Calculate the value of the credit.
  • Include the total installation amount as qualified solar electric property costs.
  • Enter the cost as reflected on your contract.
  • Complete the appropriate calculations on lines 6 (a and b) and 15 and 16.


5. Commercial Solar Tax Credit opportunities: Solar Panel ROI

This is the best time to make the switch to solar energy since building owners get a quick return on investment and considerable savings in their way of working, such as:

  • Energy savings: they can start generating their electricity and take advantage of the sunshine that characterizes our state, where energy bills are also high.
  • Other tax incentives: in addition to the Commercial Solar Tax Credit, the Florida government offers other incentives such as the sales tax exemption, which implies a savings of 6% on the installation.
  • Increased property value: this improvement makes the property more attractive to future buyers, translating into a higher value in the real estate market.
  • Reduction of operating costs: it favors the business’s financial stability since it reduces electricity costs.


6. Maximizing the Solar Tax Credit

Here are some final tips to help you get the most out of the Solar Investment Tax Credit: Understand all the requirements: from purchasing brand new solar panel equipment, remember that you must be the owner and entrust the purchase and installation to a certified company.

Take advantage of the maximum amount: become the owner of the photovoltaic system before the end of 2023. Remember that by next year the percentage will drop to 26%.

Work with a qualified solar panel company: one that offers the necessary equipment, has the technical expertise to handle the system and get it up and running quickly, provides you with the necessary guarantees, and even addresses your questions and concerns about the Solar Investment Tax Credit.

Consult with tax experts: they will provide all the documentation you need to apply for the ITC correctly. They can also advise you on regulatory compliance and the different local, state, and federal incentives.


Final Thoughts

The year 2023 is the ideal time to make the installation of solar panels on your commercial property, as you can take care of your pocket, with significant savings in the installation, a reduction of your taxes, and a lower consumption of electricity to lower the emission of greenhouse gases in our state. In addition, it demonstrates the awareness and commitment of the owners to a sustainable future where the way of working and production is not at the expense of the quality of life of the citizens and the misuse of resources.

Finally, the Solar Investment Tax Credit marks the beginning of a progressive transformation in the way of living and doing towards energy stability and efficiency.

Ready to enjoy the extension of ITC 2023? Need a solar panel installation company?

Trust Advanced Green Technology!

Solar Tax Credit Extended Through 2022

Solar Tax Credit Extended Through 2022

Here’s why 2021 is the best time to invest in solar for your commercial property and business

If you’ve been thinking of going green, here’s some good news. The solar investment tax credit (ITC), which was scheduled to drop from 26% to 22% this year, will remain at 26% for two more years. This means that all solar energy projects that begin construction this year and next will be eligible to receive the 26% tax credit. The credit will drop to 22% in 2023 for all market segments, including commercial and residential, then down to 10% permanently for the commercial and utility markets in 2024. The tax credit for residential properties will come to a close in 2024.

Why Business Owners Should Invest in Solar

Since the ITC was enacted in 2006, the U.S. solar industry has grown by more than 10,000% – creating hundreds of thousands of jobs and investing billions of dollars in the U.S. economy. For commercial property owners, solar benefits the bottom line with the ITC equal to 26% of the basis that is invested in an eligible solar property that has begun construction. But beyond the economic benefits, solar is the smart choice for our environment.

Benefits of Direct Ownership Over Shared Solar

Most businesses are looking to offset some or all of their electricity use with solar power, making solar an ideal economic and environmental solution. Simply put – solar is good business. Consumers and employees alike value sustainability now more than ever.

Property owners have a choice when it comes to investing in solar. The two most common choices are direct ownership through installing a solar panel system on your building, or a shared solar program which allows business owners to lease solar power generated by community grids without installing a system.

Direct Ownership Solar

Direct ownership, or installing a solar panel system at your commercial property, gives the owner complete control over their solar investment. Solar systems can be customized to your needs – you can power a percentage of your building’s electricity use, offset usage in common spaces, or provide car canopies and electric vehicle charging stations. One of the biggest benefits of direct ownership is the tax credit and rebates. In addition, a solar array investment often increases property values and generates an average return-on-investment in less than ten years.

Shared Solar Programs

A shared solar program allows home and property owners to subscribe to a solar energy project in their community. Participants receive a credit on their utility bill for their portion of the clean energy produced. While this is an easy way for businesses to go green without footing the upfront cost of installing solar panel systems, the availability of shared solar is limited, and businesses do NOT receive the benefits from ownership like tax credits or reduced energy costs.

Solar is an investment in the future of our state. Florida is leading the way in solar energy, ranking  #4 nationally for solar. The typical solar investment can see a return on investment (ROI) in five to 10 years when using the ITC and accelerated depreciation. Advanced Green Technologies value ROI based on energy consumption combined with intangibles such as preserving the rooftop and other additional benefits.

Ready to grow your bottom line and increase your building’s value with solar? For a free solar evaluation, call (800) 638-6869 or click here.

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