Is Your Organization Maximizing Clean Energy Tax Incentives?
In August 2022, the Inflation Reduction Act (IRA) was signed into law, marking a significant step toward a clean energy future. This groundbreaking legislation expands energy incentives for a wide range of green technologies, offering organizations like yours the opportunity to reduce costs, minimize tax liabilities, and monetize energy tax credits. If you’re planning a clean energy project, here’s what you need to know to get started.
What Technologies and Projects Are Eligible?
The IRA supports a variety of clean energy technologies and projects, including:
- Solar panels, wind turbines, geothermal systems, and other renewable energy technologies
- Alternative-energy vehicles and charging stations
- Energy storage technologies
Whether you’re upgrading your facilities or investing in renewable energy, there’s likely an incentive for your project.
How Can Your Organization Benefit?
The IRA offers powerful tax incentives designed to maximize the value of your clean energy investments. Here’s how:
Investment Tax Credit (ITC)
Receive a tax credit of up to 30% of your qualified investment for projects under one megawatt. Larger projects can also qualify by meeting prevailing wage and apprenticeship requirements.
Production Tax Credit (PTC)
Earn up to 3.35 cents per kilowatt-hour (kWh) of electricity generated by qualifying technologies during the first 10 years of operation.
Bonus Credits
Boost your savings with additional credits based on your project’s location and materials:
- Energy Community Bonus (10%): For projects in environmentally impacted areas.
- Domestic Content Bonus (10%): For projects using U.S.-made components.
- Low-Income Bonus (10-20%): For projects in qualified communities or meeting equitable ownership guidelines.
Transferability of Energy Tax Credits
Sell your energy credits to unrelated taxpayers for immediate cash flow. Credits typically sell for $0.88 to $0.95 on the dollar.
Accelerated Depreciation
Take advantage of 60% bonus depreciation in 2024, with the remaining basis depreciated over five years.
Direct Pay for Tax-Exempt Entities
Tax-exempt and governmental organizations can receive cash payments for the full value of energy tax credits, turning tax savings into immediate funding.
Why Start Now?
Clean energy projects are complex, and the tax incentives can be even more intricate. By partnering with a tax advisor who specializes in clean energy incentives, you can:
- Identify the best opportunities for your organization
- Optimize your project’s structure for maximum benefits
- Ensure compliance with all documentation and procedural requirements
Don’t leave money on the table. Start planning your clean energy project today and unlock the full potential of the Inflation Reduction Act.
Ready to take the next step?
Contact us to learn how we can help you navigate the complexities of clean energy incentives and achieve your sustainability goals.
We’re here to help.
Just send us a note and we’ll do our best to get back to you as quickly as possible.
Anthony J. Licavoli Jr., CPA
Principal | Director of Tax Consulting,Advisory and Tax Services
[email protected]
248.952.5000
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