The Top 5 Ways to Take Advantage of Energy-Efficient Incentives Today

These days, there’s an energy-efficient tax incentive for virtually every taxpayer. To really make the most of the potential savings, you’ll want to keep these points in mind:

1. First and foremost: Your savings will quintuple if you meet the Prevailing Wage and Apprenticeship Requirements.

These Requirements – known as “PWA” for short – just state that contractors must pay employees no less than the prevailing wages required for federal work. The exact wages will vary based on location and job description, and more details are available at www.sam.gov.

Additionally, a certain percentage of the total labor hours must be performed by qualified Apprentices, though there is a Good Faith Effort Exception possible if no qualified  Apprentice can be found.

These Regulations may seem cumbersome – but they certainly pay off, acting as a magical 5X multiplier of energy-efficient credit and deduction benefits.

2. Renovating your commercial property? If you implement energy-efficient improvements, the government will pick up part of the tab.

The Energy-Efficient 179D Deduction rewards energy-efficient construction as well as retrofits. The larger the property, the larger the benefit.

If PWA Requirements aren’t met, taxpayers can claim a maximum deduction of $1.00/SF. Remember that 5X multiplier?  If PWA Requirements are met, the energy-efficient deduction rockets up to $5.00/SF.

This energy-efficient deduction can be claimed by owners of commercial buildings or residential rental properties 4 stories or higher. Designers of government buildings or properties owned by tax-exempt entities can claim the deduction via allocation as well.

3. Transitioning to solar power?  Boost your Investment Tax Credit with add-ons.

The Investment Tax Credit/Clean Energy Investment Credit (ITC/CEIC) is an excellent way to offset the cost of installing solar panels. The base rate of 6% is once again subject to the 5x PWA multiplier – meaning that taxpayers could reduce their tax liability by 30%.

But the benefit doesn’t stop there. In certain circumstances you might be eligible for additional add-on bonuses:

• • Domestic Content Bonus: 10% add-on if all steel, iron, and manufactured components are produced in the US
  • Energy Community Bonus: 10% add-on if your project is located in a brownfield site, census tract, etc.
  • Low-Income Communities Bonus: 10-20% add-on if your project is located in a low-income community or on Indian land

Be sure to ask your CPA and/or energy incentive specialist about add-on eligibility for this energy-efficient credit.

4. Draw customers to your business or apartment complex by offering today’s must-have amenity – the Electric Vehicle Charging Station.

If you’re in the market to bring chargers to your customers, now’s a great time. The EV Charging Station Credit is more lucrative than ever before – the benefit cap of $100,000 has    shifted from “per location” to “per item.”  This means that if your apartment complex has 3 charging stations with two ports each, you could be eligible for up to $600,000 in credits.

Keep in mind, this energy-efficient credit is subject to PWA Requirements.

5. Remember that transferability is an option when it comes to the ITC/CEIC and the EV Charging Station Credit.

If you wish, you can sell your Credits to an unrelated taxpayer for cash. Credits are generally sold at a slight discount — perhaps $0.90 on the dollar – but this can still be an attractive option in certain situations.

And a bonus tip — don’t limit yourself to federal opportunities.  States and even cities often have their own incentives, grants, and refunds.

You want to make the most of your energy-efficient credits and deductions. That’s why it’s important to choose a partner like Capstan Tax Strategies. We can help you zero in on the right incentives, make sure they’re leveraged fully, and claim them successfully.

We’re here to help.