GB Solutions (GBS) utilizes Federal Tax programs for energy efficiency and renewable energy equipment. There are many different opportunities for many different types of building owners and their projects. Many of the programs offered by the Federal Government focus on specific technologies or overall energy efficiencies. These programs provide tax deductions or tax credits. Both offer different approaches to reducing tax liabilities.
There are a few basic differences between tax credits and tax deductions. Tax credits provide a dollar-for dollar reduction of your income tax liability. This means that a $1,000 tax credit saves you $1,000 in taxes. On the other hand, tax deductions lower your taxable income and they are equal to the percentage of your marginal tax bracket. For instance, if you are in the 25% tax bracket, a $1,000 deduction saves you $250 in tax (0.25 x $1,000 = $250).
GBS has utilized several types of tax credits and tax deductions through out different projects.
Energy Tax Credits
The US Tax Code has several options for tax credits. Including Renewable Energy Tax Credits, Residential Energy Efficiency Tax Credits, and Vehicle Tax Credits.
Commercial and multi-family residential buildings can take advantage of Business Energy Investment Tax Credit (ITC). This program provides tax credits for solar, geo-thermal, wind, and other renewable technologies. The tax credit applies a percentage of cost per specific technology implemented.
|PV, Solar Water Heating, Solar Space Heating/Cooling, Solar Process Heat||30%||30%||30%||30%||26%||22%||10%||10%|
|Hybrid Solar Lighting, Fuel Cells, Small Wind||30%||30%||30%||30%||26%||22%||22%||N/A|
|Geothermal Heat Pumps, Microtubines, Combine Heat and Power Systems||10%||10%||10%||10%||10%||10%||N/A||N/A|
Energy-Efficient New Homes Tax Credit for Home Builders (45L) focuses on the energy efficiency of the unit. This credit provides between $1000-$2000 per unit tax credit to the builder/developer of the unit. This can apply to multi-family and single family residential buildings. It has been renewed several times and is expected to be renewed before the end of 2018 as a retro active tax credit for the 2018 tax year.
Energy Tax Deductions
The Commercial Building Energy Efficiency Tax Deduction is a tax deduction of $1.80 per square foot is available to owners of new or existing buildings who install (1) interior lighting; (2) building envelope, or (3) heating, cooling, ventilation, or hot water systems that reduce the building’s total energy and power cost by 50% or more in comparison to a building meeting minimum requirements set by ASHRAE Standard 90.1-2007. Energy savings must be calculated using qualified computer software approved by the IRS. Additionally, deductions of $0.60 per square foot are available to owners of buildings in which individual lighting, building envelope, or heating and cooling systems meet target levels that would reasonably contribute to an overall building savings of 50% if additional systems were installed. Like the 45L Tax Credit this incentive is expected to be renewed before the end of 2018 as a retro active tax credit for the 2018 tax year.
Modified Accelerated Cost-Recover System (MACRS) is used to accelerate the depreciation of specific assets. MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property (26 USC § 168(e)(3)(B)(vi)) under the MACRS, which refers to 26 USC § 48(a)(3)(A), often known as the energy investment tax credit or ITC to define eligible property. Such property currently includes*:
- a variety of solar-electric and solar-thermal technologies
- fuel cells and microturbines
- geothermal electric
- direct-use geothermal and geothermal heat pumps
- small wind (100 kW or less)
- combined heat and power (CHP)