Business Tax Credits

Tax Credits and Depreciation Benefits

So what’s a tax credit and how does it work?

First let’s clarify that a tax credit is more powerful than a tax deduction. After you enter your information on tax returns and take advantage of any available deductions, you get to the bottom line, whether you owe anything to the government or not. If you owe a dollar in tax, but have a tax credit worth a dollar, the tax credit erases your debt (dollar for dollar).

The Business Federal 30% Tax Credit

The federal government provides a 30% tax credit, and allows you to roll over and redeem the balance of tax credits in future years. The Federal credit is claimed on IRS form 5695 for personal returns, and most often IRS Form 3468 for business returns. It is a standard tax credit, which means you should have taxable income to make use of the credit.

The Federal Accelerated Depreciation Benefit

The federal government also provides accelerated depreciation benefits that allow up to 85% of the cost of a solar system to be written off of income in the first five years. This can add another 20-30% tax benefit value to a business owner in the first five years of solar system ownership, cutting thousands off of the cost of going solar.

More information on business tax incentives can be found on the DSIRE Website for Louisiana.

Note: Solar Alternatives does not provide financial or tax advice. Please consult a CPA or professional tax advisor for how solar tax credits would apply to your individual financial circumstances.