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Tax Incentives for Solar on Farms and Rural Small Businesses
Solar power is an attractive option for farms and other rural small businesses looking to reduce their energy costs and their environmental impact. In addition to the long-term benefits of solar power, there are also tax incentives that can make it a financially lucrative choice for these types of businesses.
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Federal Investment Tax Credit
The Federal Investment Tax Credit (ITC) is a tax incentive that offers a 30% tax credit for the cost of installing a solar energy system. This credit can be used to offset federal income taxes owed by the business, and it can be carried forward to future tax years if the full credit cannot be used in the current year. The ITC was established by the Energy Policy Act of 2005 and has been extended several times, most recently in 2022.
Essentially, the Federal Investment Tax Credit is a program in which the federal government allows you to take money you would have paid to them via taxes and instead invest it into a solar system that will save you money and protect you from inflation for the next 40+ years
WHY SOLAR?
Accelerated Depreciation
Accelerated Depreciation is another tax incentive that can benefit farms and rural small businesses that invest in solar energy systems. This incentive allows businesses to recover the cost of the system more quickly by taking larger depreciation deductions in the early years of ownership. This can reduce the business’s taxable income, resulting in lower tax liability.
The Modified Accelerated Cost Recovery System (MACRS) is the tax code provision that governs depreciation for solar energy systems. Under MACRS, businesses can recover the cost of the system over a period of five years, using a set schedule of deductions. However, the bonus depreciation provision allows businesses to deduct up to 80% of the cost of the system in the first year of ownership, further accelerating the depreciation schedule. The bonus depreciation provision will decrease to 60% in 2023, so don’t wait to see what a solar system would look like on your farm or small business.
Any business that invests in a solar energy system is eligible for accelerated depreciation, regardless of size or location. This makes it a particularly attractive option for farms and other rural small businesses, as it can provide significant tax benefits that can help offset the cost of the system.
In conclusion, farms and rural small businesses can benefit greatly from tax incentives when investing in solar energy systems. The Federal Investment Tax Credit and Accelerated Depreciation are two powerful incentives that can help reduce the financial burden of solar power and make it a smart choice for businesses looking to save money and reduce their environmental impact.
Real-world example
total project cost
$200,000.00
1. 50% REAP Grant
$ 100,000.00
2. 30% Federal Tax Credit
$ 60,000.00
4. Year 1 State Depreciation (7.85% Tax Bracket)
$ 2,669.00
YEAR 1 NET PROJECT COST AFTER INCENTIVES
$3,059.00
Client Reviews
I had the pleasure of working with Ian with AG & Business Solar Partners to install a solar system for my small farm. The team was professional and knowledgeable, and they took the time to explain everything in detail. The installation process was smooth and hassle-free, and I was impressed with the quality of their work. Since switching to solar energy, I have noticed significant savings on my monthly energy bills, and I feel good knowing that I’m doing my part to reduce my carbon footprint. I highly recommend AG & Business Solar Partners to any small business or farmer looking to make the switch to renewable energy.
Nicole Tilley
Minnesota, USA
I recently had AG & Business Solar Partners install a solar system for my small business, and I couldn’t be happier with the results. The team was friendly, knowledgeable, and efficient throughout the entire process. They were able to work within my budget and offered me several options to choose from. The installation was completed in a timely manner, and the system has been working flawlessly ever since. Not only have I noticed significant savings on my energy bills, but I also feel good knowing that I’m contributing to a more sustainable future. I highly recommend AG & Business Solar Partners for anyone looking to make the switch to solar energy.
Paul Jacobs
Minnesota, USA
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We are a full-service solar broker that partners with the most reputable installers around the country. When you choose AG and Business Solar Partners, we work with multiple potential installers in your area to ensure that you receive the best price and experience possible. Our services are tailored to farms and small businesses, and we help you secure the USDA REAP Grant that covers 50% of the total project cost. When combined with the 30% Federal Investment Tax Credit and accelerated depreciation, you can make the switch to renewable energy for a fraction of the cost. Make the switch today with AG & Business Solar Partners, the professionals in renewable energy.
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