Commercial Solar Rebates and Incentives

Business Energy Investment Tax Credit (ITC)

Businesses that install solar photovoltaic (PV) systems are eligible to receive a tax credit in the amount of 30% of the total PV system cost. Unlike tax deductions, this tax credit can be used to directly offset your tax liability dollar for dollar. If your tax credit exceeds your tax liability you can roll the credit into future tax periods for 20 years.

State (CA) Modified Accelerated Cost-Recovery System (MACRS)

Under the Modified Cost Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property over which the property may be depreciated.

Federal - 100% bonus depreciation (2018, Tax Reform Bill)

The Tax Reform Bill modifies bonus depreciation under Code Section 168(k) to allow 100% expensing for property placed in service after September 27, 2017 and before January 1, 2023. By increasing bonus depreciation to 100 percent, the new tax bill essentially allows eligible entities to deduct the entire allowable tax basis of the system in the first year of operation. Under the federal Modified Cost Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. MACRS establishes a lifespan for various types of property over which the property may be depreciated. For PV systems, the taxable basis of the equipment must be reduced by 50% of any federal tax credits associated with the system.

Federal MACRS, Bonus Depreciation - 40% (2018)

Under the federal Modified Cost Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. MACRS establishes a lifespan for various types of property over which the property may be depreciated. For PV systems, the taxable basis of the equipment must be reduced by 50% of any federal tax credits associated with the system. The 40% Bonus Depreciation provision (for systems placed in service in 2018) means that in the first year of service, companies can elect to depreciate 40% of the basis while the remaining 60% is depreciated under the normal MACRS schedule.

State (CA) 10-year straight line Depreciation

The straight line method divides the cost or tax basis, into equal amounts over the estimated useful life of the property. Per California Franchise Tax Board, Form 3885, state MACRS depreciation is not allowable for Corporations, except to the extent such depreciation is passed through from a partnership or LLC classified as a partnership.

Federal Modified Accelerated Cost-Recovery System (MACRS)

Under the federal Modified Cost Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. MACRS establishes a lifespan for various types of property over which the property may be depreciated. For PV systems, the taxable basis of the equipment must be reduced by 50% of any federal tax credits associated with the system.