What You Need to Know About the Business Energy Investment Tax Credit (ITC)
10/01/2020
Companies across the United States have a unique opportunity through the Business Energy Investment Tax Credit (ITC), to move forward with clean energy facility improvements.
Through the end of 2020, businesses can benefit from a 26% tax credit on their gross renewable energy system which includes solar photovoltaic (PV) systems.
The Business Energy Investment Tax Credit (ITC), was passed under President George Bush’s administration via the Energy Policy Act of 2005. The ITC is a Federal initiative created to facilitate the adoption of clean energy.
Eligibility & Schedule
To be eligible for the 26% ITC, a solar PV system must have begun and continued construction or you must pay 5% or more of the total construction cost on or before December 31, 2020.
The tax credit will decrease to 22% for systems beginning construction in 2021, and 10% for systems beginning construction in 2022 or later. Any PV system placed in service after 2023, regardless of when construction began, can receive a maximum tax credit of 10%. At this time, there is no maximum incentive limit on Solar PV systems.
The primary requirements for this tax credit are that you:
1) Own the system by going solar via cash or a solar loan (lease or PPA financing cannot claim the tax credit)
2) That your business has income tax liability, which is what this incentive reduces
Eligible Expenses
The ITC is calculated by multiplying the applicable tax credit percentage (26% in 2020) by the “tax basis,” which is the amount invested in eligible property. Eligible property includes the following:
- Solar PV panels, inverters, racking, balance-of-system equipment, and sales and use taxes on the equipment
- Installation costs and indirect costs
- Step-up transformers, circuit breakers, and surge arrestors
- Energy storage devices (if charged by a renewable energy system more than 75% of the time)
Solutions
Taking the complication out of customization, Foley Power Solutions and Cromwell Solar have worked together to build custom solutions for companies using Cat solar, microgrid controls and energy storage systems.
Together, we are proud to offer:
- Complete turn-key solutions from design to installation
- Quality Cat products
- Competitive pricing
- Access to a wide range of financing options through Caterpillar Finance
- On-going service & maintenance solutions
There’s no better time for U.S. businesses to make this important investment in their facilities. Click here to learn more about Cromwell Solar and Foley Power Solutions offering.
For more information, and detailed eligibility requirements visit: https://www.energy.gov
**Please note that this article is for informational purposes only and should not be considered tax advice. For specific tax advice and all information concerning tax credits please consult with your tax adviser.**