Great news! The solar tax credit we all know and love has been extended!
This means sunny days are ahead for business owners interested in adopting solar. Previously, in order to be eligible for the full investment tax credit (ITC), photovoltaic energy systems had to be completed before 2017.
Now, companies have more time to claim the ITC and all its benefits.
On their last day of work in 2015, Congress approved a five-year extension of the tax credit.
With this extension, business owners can reduce their federal income tax liability by 30 percent of the cost of installing a commercial PV system. (Note that the system must be in service by Dec. 31, 2019.)
After this date, the ITC begins to step down the maximum allowable credit. Systems placed in service in 2020 will be eligible for a 26 percent credit, while those completed in 2021 can claim a 22 percent credit. After 2021, commercial installations will only qualify for a 10 percent credit.
The ITC also includes a “commence construction” provision. This means that some projects put into service before 2024 may still claim the solar tax credit amount available at the time when the projects began.
According to industry forecasts by GTM Research, the ITC extension will enable U.S. solar capacity to expand by an additional 25 gigawatts over the next five years. Reports suggest that industry growth as a result of the expansion will be 54 percent greater than if the solar tax credit bill had not passed.
This growth is expected to lead to billions of dollars in incremental investments in photovoltaic power over the next several years. Shortly after the ITC extension was approved, stocks of many of the major players in the industry — including SolarCity Corp, SunEdison, Sunrun Inc. and Real Goods Solar — were soaring. Even in light of the downturns of early 2016, market experts are bullish about the industry’s continued long-term growth.
Because of the ITC extension, businesses now have ample time to complete most photovoltaic projects.
Because commercial solar installations are more complex and time-consuming than residential ones, however, don’t delay getting started. The closer the deadline looms, the busier solar installation companies will be.
Remember, most installations must be operational before 2020 to qualify for the full 30 percent ITC, and that date will be here before you know it! If you are considering a solar energy installation for your business, now is the time to act.
Intermountain Wind and Solar designs and installs commercial solar energy systems for businesses of all sizes. We serve the Intermountain West states of Utah, Colorado, Wyoming, Nevada and Idaho.
Contact us today for more information about how photovoltaic energy can save your company money. We will be happy to tell you about all the available incentives and financing options, and help you take full advantage of the solar tax credit.
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