Modified Accelerated Cost Recovery System (MACRS)
If you're considering investing in solar power for your home or business, understanding the financial incentives available can significantly impact your decision. One such incentive that can enhance the financial viability of solar installations is MACRS (Modified Accelerated Cost Recovery System) depreciation.
MACRS is a depreciation method approved by the IRS for qualifying assets, including solar energy systems. Under MACRS, the cost of your solar investment can be recovered through depreciation deductions over a specified recovery period, typically five years for solar equipment. This means that you can deduct a portion of the cost of your solar system from your taxable income each year, providing valuable tax savings.
Renewable Energy for America Program (REAP)
The REAP provides financial incentives to support the implementation of commercial solar projects, including:
Grants
1. REAP offers competitive grants to help offset the upfront costs of installing solar energy systems. These grants can cover a portion of the total project costs, making solar energy more accessible and affordable for businesses. Grants can be up to 50% of eligible project costs.
Loan Guarantees
1. Businesses can access low-interest loans with favorable terms and conditions through REAP’s loan guarantee program. These loans can be used to finance the purchase and installation of solar panels and related equipment, with the assurance of USDA backing.
Tax Credits
1. In addition to direct financial assistance, businesses may also be eligible for the 30% federal tax credit for investing in solar energy systems. The federal tax credit, combined with a 50% REAP grants, results in 80% of the system cost being paid on the system owners’ behalf. Both the REAP grant and tax credits are realized after the system has been installed and paid for.