As tax season looms, we wanted to provide some resources for our clients and partners that may be able to get some tax relief based on some of your recent efforts to upgrade to more energy efficient building systems.
As businesses become more focused on sustainability, energy efficiency is a crucial factor to consider. Fortunately, there are a variety of tax credits available to businesses that make energy-efficient upgrades to their buildings and operations. In this blog post, we’ll explore some of the available tax credits and provide resources to help businesses take advantage of them.
Energy-Efficient Commercial Buildings Tax Deduction This tax deduction, also known as Section 179D, provides up to $1.80 per square foot for energy-efficient improvements made to commercial buildings. Eligible improvements include HVAC systems, lighting, and building envelope improvements. To qualify for the deduction, the improvements must meet specific energy efficiency standards. To learn more about this tax deduction, check out the resources provided by the Department of Energy: https://www.energy.gov/eere/buildings/179d-commercial-buildings-energy-efficiency-tax-deduction
Business Energy Investment Tax Credit (ITC) The Business Energy ITC provides a tax credit of up to 26% for the cost of energy-efficient equipment and systems installed in commercial buildings. Eligible improvements include solar panels, wind turbines, geothermal systems, and fuel cells. The credit applies to equipment placed in service before the end of 2023, after which it will gradually decrease. The Department of Energy provides a comprehensive guide to the Business Energy ITC, including eligibility requirements and application procedures: https://www.energy.gov/eere/femp/business-energy-investment-tax-credit-itc
Energy-Efficient Home Credit This tax credit is available to businesses that construct or renovate residential buildings that meet specific energy efficiency standards. Eligible improvements include insulation, windows, doors, and roofing. The credit is worth up to $2,000 per home and can be claimed for up to 50% of the eligible costs. For businesses that have remote workers, the Internal Revenue Service provides guidance on the Energy-Efficient Home Credit: https://www.irs.gov/businesses/small-businesses-self-employed/homebuilder-energy-efficient-homes-credit
Local and State level tax credits and incentives may also be available. While Ohio does not currently offer state-level energy efficiency tax credits, the following resources may be helpful for finding local incentives:
Energy.gov's Ohio incentives and policies for renewables and efficiency
Database of State Incentives for Renewables & Efficiency (DSIRE) Ohio page
Ohio's Office of Energy Efficiency and Renewable Energy
Pennsylvania offers a range of tax credits and incentives for energy-efficient upgrades to residential and commercial properties. These include tax credits for solar energy systems, geothermal heat pumps, and energy-efficient buildings. The state also has a program that provides rebates for the purchase of energy-efficient appliances, and some local governments may offer additional incentives for energy-efficient upgrades. Here are some resources to explore:
Pennsylvania Department of Environmental Protection Energy Programs and Incentives
Energy Star's Pennsylvania Incentives and Rebates page
DSIRE Pennsylvania page
KeystoneHELP financing program for energy-efficient upgrades in Pennsylvania homes
Pennsylvania Sustainable Energy Fund
It's always a good idea to check with your local utility companies, as they may also offer incentives for energy-efficient upgrades.
In conclusion, there are many resources available for finding energy tax credits and incentives for businesses. By taking advantage of these programs, you can save money on your energy bills while also reducing your business's environmental impact. Be sure to do your research and explore all the options available to your business.
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