Take Advantage of Solar Tax Incentives For Your Business
The combination of Hawaii's Federal and State tax incentives, high electricity rates, and our state's natural abundance of sunshine make investing in photovoltaic solar systems for your business an economic opportunity and can amount to a 90% reduction in a business's initial solar investment. Combining tax incentives with the energy savings of a solar system, most business solar systems can pay for themselves within 2-3 years.
Federal Solar Tax Incentives
Investment Tax Credit (ITC)—The ITC allows businesses to take 30% of the installed cost of your PV system as a non-refundable credit against your overall tax liability. The credit is uncapped and can roll forward up to 20 years or back one year. Starting in the 2017 tax year, the ITC drops to 10%. Modified Accelerated Cost Recovery Program (MACRS)–Under the MACRS accelerated depreciation schedule you can write off 85% of your total project cost over six years. An additional "bonus depreciation" provision allows 60% of that adjusted cost basis amount to be taken against your taxes in Year 1. By providing this opportunity to accelerate the loss, the government is encouraging businesses to purchase capital equipment now instead of later.
State Solar Tax Incentives
The state of Hawaii offers the Renewable Energy Technologies Income Tax Credit (RERITC) with two different options:
Option 1—Non-Refundable Credit— This credit is worth 35% of the installed cost. There is no basis reduction and the unused portion rolls forward after applying it against taxes owed. This credit can be difficult for some companies to monetize because it usually substantially exceeds the state corporate tax liability for a single year.
Option 2—Refundable Credit— This credit is worth 24.5% of the installed cost and pays you cash for any amount left over after it has been applied to your tax bill. An important note: If you have pension income or low income, you can take the 35% as refundable, making this a good option for retirees.
Standard Modified Accelerated Cost Recovery Program (MACRS)–Under Hawaii's MACRS accelerated depreciation schedule you can write off 100% of your total project cost over six years. There is no "bonus depreciation" provision on the state level, but this schedule allows 20% of the project cost to be taken in Year 1 and 32 percent to be taken in Year 2.
Solar Power For Businesses Pays!
Hawaii businesses are increasingly turning to solar energy solutions to work more efficiently, save money, and stay competitive. It's not hard to see why businesses are choosing solar energy to meet their energy needs. As a business you will:
- Save money on your electricity bill by converting it from a variable expense to a fixed expense
- A significant return on investment- usually between 15-35%
- Protect your business from rising energy costs
- Reduces your business's carbon footprint
- Value of your building will appreciate
- It may qualify you for federal and state tax credits and other savings
As partners with your business, Kama'aina Solar Solutions will help you take advantage of the State and Federal tax credits. Learn more about our Solar Solutions Package for small and large businesses.