Commercial Solar Incentives
Commercial solar panels cut operating costs and save businesses money! But that’s not the only benefit of installing solar panels for businesses, schools, institutions, and government buildings—commercial solar installations also qualify for incentives. Commercial solar rebates and incentives can reduce your upfront installation costs and speed up your payback period and return on investment.
Solar Energy Solutions is the leading commercial solar company in the Midwest and we’re here to help you take advantage of incentives like the solar tax credit, MARCS depreciation, USDA solar grants, and more.
We also offer financing and can help you find the right option for your business:
Keep reading to learn more about the best commercial solar incentives.
Federal Solar Tax Credit for Commercial Solar Installations
The federal solar tax credit (also known as the Investment Tax Credit) is a dollar-for-dollar credit that reduces your federal tax liability by a percentage of your solar installation costs. In 2022, the Inflation Reduction Act increased the federal solar tax credit to 30% for commercial solar projects completed between 2022 and 2032. The new Inflation Reduction Act also created a direct-pay option as a solar incentive for nonprofits.
Eligible states: The solar tax credit is a federal solar incentive. Solar projects in all 50 states are eligible, including Indiana, Illinois, Ohio, and Kentucky.
Production Tax Credit
The Production Tax Credit (PTC) is a per-kWh tax credit. Under the PTC, commercial solar projects will receive a tax credit based on the amount of solar energy they produce for ten years. Projects will receive a base credit that is adjusted annually based on inflation. Commercial solar projects must choose between the federal solar tax credit and the Production Tax Credit—they cannot receive both.
Eligible states: The Production Tax Credit is a federal solar incentive. Solar projects in all 50 states are eligible, including Indiana, Illinois, Ohio, and Kentucky.
MACRS Depreciation for Commercial Solar Projects
The Modified Accelerated Cost Recovery System (MACRS) commercial solar incentive is a depreciation method that allows businesses to recover their investment in certain assets over a specified period of time through annual tax deductions. Qualifying commercial solar energy equipment is eligible for a cost recovery period of five years. For solar projects on which the federal solar tax credit is also claimed, the project’s depreciable basis is reduced by half the value of the 30% solar tax credit.
Eligible states: MACRS depreciation is a federal incentive. Solar projects in all 50 states are eligible, including Indiana, Illinois, Ohio, and Kentucky.
USDA REAP Grant & Financing
The USDA Rural Energy for America Program (REAP) helps agricultural producers and rural small business owners install their own renewable energy systems. The program provides grant funding up to 40% of total eligible project costs. The 30% Federal Solar Tax Credit the ITC can be added to the 40% for a combination of 70% off the initial project cost. The program also has loan financing options on remaining project costs.
Eligible states: The Rural Energy for America Program is a federal incentive. Rural solar projects in all 50 states are eligible, including Indiana, Illinois, Ohio, and Kentucky.
Net Metering for Commercial Solar
Net metering is a solar incentive system that allows solar owners to trade energy with the electric grid. When your panels produce more than you need, you can export the excess electricity to the grid in exchange for a credit to your account. This offsets the cost of electricity you buy from the grid, increasing the value of your solar energy system. With net metering, solar panels are like a virtual tenant paying rent to be on your property.
Eligible states: Net metering policies are decided at the state level and vary by utility company. Many states have net metering programs that are favorable or less favorable than others. There is currently net metering in Indiana, Illinois, Ohio, and Kentucky. Here’s the latest on Net Metering in Indiana. Also, net metering in Kentuck is under attack—go solar now to take advantage of net metering before it’s too late!