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Commercial Incentives

The Investment Tax Credit (ITC) reduces your organization’s federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year. Projects starting construction in 2023 to 2033, the tax credit is 30% of the qualified expenditures of a commercial solar system. Tax-exempt organizations can also take advantage of the tax credits through a 30% direct payment or credit transfer. 

Depreciation: Businesses that claim the ITC can use an accelerated depreciation schedule. Accelerated depreciation rules allow the full tax basis minus half the ITC to be depreciated over a MACRS 5-year schedule.

(Note: while the ITC is a tax credit, depreciation is a deduction.)

In addition to the 30% ITC tax credit, there are three bonus adders available:

Domestic Content Bonus

To qualify for the domestic content bonus, all steel or iron used must be produced in the United States and a “required percentage” of the total costs of manufactured products need to be mined, produced, or manufactured in the United States.

The required percentage of manufactured products starts at 40% for all projects beginning construction before 2025, increases to 45% for projects in 2025, 50% in 2026, and 55% for 2027 and beyond.

There is a 10-percentage-point increase in the value of the ITC if the project qualifies for the Domestic Content Bonus. 

Yes routinely qualifies for the Davis Bacon Act wage determinations due to the structure of our compensation plans. 

Energy Community Bonus

Projects sited in an energy community are eligible for a 10-percentage-point increase in the value of the Investment Tax Credit. An energy community is as defined below:

  1. An area contaminated by a hazardous substance, pollutant, or contaminant (excluding petroleum), including certain mine-scarred lands. 
  2. An area with a census tract in which a coal mine closed after 1999 (including any adjoining census tract), or a coal-fired electric generating unit closed after 2009.
  3. An area that, after 2009, had a 0.17% or more direct employment or 25% or more local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas, and has an unemployment rate at or above the national average for the previous year.

View Energy Community Eligibility Here.

Low-Income Community Bonus

This bonus is available to projects under 5 MW and is subject to a 1.8 GW cap per year. 

  • Low-Income Community: 10% ITC (or elective payment for nonprofits) for clean energy projects.
  • Low-Income Residential Building Project: 20% ITC (or elective payment for nonprofits).
  • Low-Income Economic Benefit Project: 20% ITC (or elective payment for nonprofits) for community solar projects.
  • Federally Recognized Indian Tribes: 20% elective payment

View Low-Income Community Eligibility Here.

All four bonus categories have unique qualification requirements and funding caps. 

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