Green Energy Tax Savings

Green Energy1

Green Energy Tax Savings

Green Energy Tax Savings
Green Energy Tax Savings
By Nirali Chokshi, CPA

The Earth is such a beautiful planet. We only have one to live on. If you’re paying attention to the news, you will see the government has deregulated environmental protection standards on companies. So what does this mean? It gives companies more rights to abuse the environment and not think of the future consequences to our children or others. And not only that, the US has signed out of the Paris Agreement for climate change, installed fewer standards for car companies which can allow for increased emissions, and removed protection for endangered species and national parks to name a few changes. This all has happened in about a year.

For now, at least the new tax bill is on Mother Earth’s side. The Internal Revenue Service (IRS) has welcomed and granted tax credits to those businesses and individuals who use resources that are less damaging to the earth.

As a Business what Tax Incentives do I get?

As a business, the IRS grants Energy Investment Tax Credits (ITC) to those that fulfill the requirements of 1) owning or build the equipment 2) placed into service the year you take the tax credit 3) the technology on the equipment satisfies the minimum guidelines. Below is a table provided from Energy.gov on the tax credit for the different types to technology.

TECHNOLOGY – Business Tax Credit 12/31/18
PV, Solar Water Heating, Solar Space Heating/Cooling, Solar Process Heat 30%
Hybrid Solar Lighting, Fuel Cells, Small Wind 30%
Geothermal Heat Pumps, Microtubines, Combine Heat and Power Systems 10%
Geothermal Electric 10%
Large Wind 18%

(Table from Energy.gov)

Now you may be asking, but I don’t pay taxes at the business level? If you’re not a C Corporation, that’s correct! So these Credits will be passed down to you through the K-1 into your personal.

But what if you don’t own a business?
Don’t worry, the IRS has incentives for you too!
Energy efficient products for the home are eligible for tax credits if they meet the technical standards for a $500 tax credit – these can apply to items such as heating and cooling equipment, appliances, and lighting. Solar, wind and geothermal equipment has up to a 30% of cost tax credit. And most electric cars can help alleviate your tax burden with a $7,500 tax credit.

Ask you tax accountant what kind of tax savings it can have for you as everyone’s situation is different.
Go Green, not only for the environment but to have more money in your pocket.

Nirali ChokshiAbout Nirali Chokshi, CPA

Nirali is a CPA working at her family’s accounting firm Chokshi Accounting & Tax Services in Orlando, FL. She graduated with her Masters from University of Central Florida in 2009.