Businesses

The government is anxious to pay you to go solar

 

How much?

Up to 85% of your system costs!

Federal Government pays        30%

Hawaii Government pays          25% (approximate after tax)

Depreciation                                  30% (approximate depending on tax bracket)

Business Total                          85%!

**If you would like the long version read on**

The Federal government will give you 30% of the cost of your system in tax credits . For business owners you can also fully depreciate 85% of your system ! Depending on your tax bracket that could give you another 30% for a total of 60%!

The Hawaii State government offers you even more! They will give you a tax credit equal to 35% of your system cost.

Tax Credit?

It is important to recognize that both the Federal and State incentives are a tax credit, not a tax deduction. Tax credits are much better because it means that the government incentive is a dollar for dollar elimination of tax liability. For example, if you would otherwise owe $5,000 in state income tax but earn a $5000 solar tax credit, then you owe no State income tax.

What if I have little tax liability to use the tax credits?.

Unused tax credits can be carried forward to future years so any unused tax credits are not lost. The State also passed a Senate Bill (SB464) that allows individuals to elect to disconnect the incentive from their tax liability and take a reduced incentive in the form of a 24.5% rebate check.

This means that low tax liability is no issue.

Can I depreciate the cost of the system?

Federal section 179 allows 5 year accelerated depreciation of 85% of your system costs. However, in December of 2010 Bonus depreciation was extended that allows for full depreciation of 85% of your system costs in the first year! State allows depreciating 100% over 5 years. The combined depreciation tax benefits amount to upwards of 35% of your system cost.

Click on the links below to visit the DSIRE web site for further references regarding solar incentives:

Business Federal Tax Credit

Federal Payments for Specified Energy Property Grant Program

Hawaii Business Tax Credit (or 24.5% rebate check)

Federal Depreciation

Note: You may have noticed that the Hawaii State incentive is 35% yet we have listed in our opening calculation as only 25% (approximate after tax). This is because any income tax you pay the State is a tax deduction on your Federal tax return, and the opposite is true. Reducing the amount you pay the State means less deduction on Fed side. Essentially this mean you pay tax on the State solar tax credit. Therefore the real State incentive is the 35% reduced by your Fed tax bracket.

Not sure what tax bracket you are in?

Refer to these clickable links:

Fed Tax Brackets

Hawaii Tax Brackets

How long will these incentives last?

Although most of these government incentive programs are planned to run for the next few years they are subject to repeal if the governments find that they can’t afford it. The Federal grant program is to expire the end of 2011. Therefore it is prudent to get your system installed while they are still committed.

Call us today for a free evaluation of your solar options.

Call Jim at 635-6462  or email jim@XMXpower.com

 

  • KIUC Rate Increases

  • Rules Of Thumb

    Rule Of ThumbSpend $8k on solar for your home and save $100 per month on your energy bill.

    tax incentivesSpend $6k on solar for your business and save $300 per month on your energy bill!

    tax incentivesHomeowners get approximately 15%-17% return on their investment!

    tax incentivesBusiness owners get over 50% return on their investment!

    tax incentivesSavings typically pay back your investment about 6 years. After that your solar energy is FREE!

What about government incentives?

tax incentives The Federal and State Solar Investment Tax Credits just got WAY better. Now if you own a home you pay as little as 45% of the cost of your system. If you own a business you pay even less, as little as 15% of the cost of a solar system. For more details see our detailed explanation of government incentives.

Is solar good for the environment?

tax incentivesOn Kauai 92% of our electricity is generated from fossil fuel (diesel). The average household switching to PV power saves burning over 9 barrels of oil per year. This saves over 4 metric tons of green house gas put into the atmosphere each year! Check out  real time web monitoring.