Tax incentives, grants, and loans for businesses & farms can all play a role in making green energy affordable and attractive options for home owners and business leaders alike.
The US Government began offering tax credits on renewable energy projects in 2006. It was recently reinstated at a 30% rate for the next ten years, 2022-2032. The Investment Tax Credit (ITC) is a credit applied to your federal taxes on the total project cost. If your tax burden isn’t large enough to claim the entire credit in a single year, this credit balance will be rolled over to subsequent years.
In addition to the base ITC at 30%, the Inflation Reduction Act also put extra tax incentives in place for the use of domestic products, energy siting communities, and low-income communities. Each of these could add an extra 10% credit to the incentive. To take advantage of the domestic content the project must demonstrate a 40% level of domestic goods and labor on the project. The energy siting community credit is tied to areas related to coal mining or similar mining activities where job loss would occur as renewable energy options are put in place. The final 10% credit is based on low-income areas as defined by the latest census information. More details can be found here.
In addition, small businesses and agricultural producers can apply for federal grants and loans to support their renewable energy and energy efficiency projects. The Renewable Energy for America Program through the USDA offers grants for up to 50% of project costs, and loans for up to 75% of costs. You can even combine these funds for maximized savings, but the project owner is required to pay at least 25% of the total cost.
The REAP program is an incredible resource but is nuanced enough that we strongly suggest you contact a grant writer to help with the application process if you decide to pursue a grant or loan. Visit the USDA website for program details.
Your local renewable energy or energy efficiency experts should be able to help guide you to the best financing option for your project.