- 14% reduction in the corporate tax rate can increase electricity expenses by 21.5%.
- 100% depreciation bonus allows businesses to deduct the entire project investment in year one.
- 30% Tax Credit is available can help reduce the system price by up to 60%
1. 14% Reduction of the Corporate Tax Rate
One of the most significant benefits of installing solar under the new tax plan is the reduction of the federal corporate tax rate from 35% to 21%. An important deciding factor for businesses considering going solar is the increase in profits that can result.
While this historically low corporate tax rate brings new investable cash to the business world, it simultaneously produces a net increase in the cost of energy for the same business. Under the previous tax code, a $1,000 monthly power bill would be deducted as an operating expense at a 35% percent yielding a net cost of $650.00. Under the new code, that same $1,000.00 bill is deducted at a 21% rate generating a net power bill of $790.00. Your power bill is going up 21.5% regardless of the current utility rates from the operating tax deduction alone, making renewable energy more valuable than ever.
For increased savings, solar systems purchased outright with cash avoid the taxes that come with loan interest payments, making cash a more attractive option than financing. Add to that an increased rate of return each year as a result of the lower tax rate and solar becomes a viable investment for businesses.
2. 100% Bonus Depreciation
With depreciation now at 100 percent, a business can deduct the entire cost of the solar system in its first year rather than spread it out over a period of time. This allows corporations to take advantage of the tax savings now rather than in the future, resulting in growing returns from going solar as well as an increase in the total value of the project.
3. 30% Tax Credit Available
The federal solar tax credit allows you to deduct 30% of the cost of installing a solar energy system from your federal income taxes until 2020. You can also claim the tax credit as soon as the construction of the system begins. The tax credit and depreciation benefit can help reduce the system price by as much as 60 percent. Add that to savings from a reduced utility bill, and business owners are looking at a bright investment.
Seeing is Believing
Some of Florida’s largest businesses like Publix Supermarkets, Ed Morse, Lockheed Martin, and Advanced Roofing have installed solar on their properties, from rooftop installations to solar carports. Solar has short payback period, provide steady financial returns, and help business owner’s hedge against rising energy prices. According to our data, Advanced Roofing paid on average $1,623.00 in monthly electricity bills before going solar. After the installation of an 84 kW solar carport at our headquarters in Fort Lauderdale, our electricity bill is approximately $890.00 – a 55% reduction.
How much money can solar save your business?
Contact us today for your complimentary energy audit and project quote.