Common incentives for commercial solar projects
Businesses considering solar often qualify for a mix of federal, state, and local incentives that improve project economics. The federal Investment Tax Credit (ITC) provides a percentage tax credit of system costs (subject to current legislation and eligibility). Many states and municipalities add incentives such as performance-based incentives, grants, rebates, or property tax exemptions.
Typical incentives and benefits:
- Federal tax credits (e.g., ITC) for eligible projects
- State or utility rebates and performance-based incentives
- Accelerated depreciation (bonus depreciation and MACRS) to reduce taxable income
- Local grants, low-interest loan programs, or PACE financing
- Sales and property tax exemptions in some regions
How to maximize incentives
- Confirm eligibility and timelines for federal and state programs
- Work with a tax advisor or solar financier to structure deals that capture tax benefits
- Check utility and local government programs for additional rebates or performance payments
- Factor incentives into an overall financial model to calculate payback and ROI
Incentive availability changes over time and can depend on project ownership (e.g., cash purchase vs. lease or power purchase agreement). Early consultation with a knowledgeable installer or energy advisor helps ensure you claim applicable incentives.