Energy Credits

Please find below a brief recap provided to the Lexington County Green Business program about green businesses and applicable tax incentives that can be utilized to the benefit of a business. 

Tax laws are often used as an incentive to stimulate investment in various areas, and energy credits are no stranger to the tax code.  Many of the credits may often be so small that few taxpayers are interested in pursuing same, but each taxpayer must make that decision individually.

Many of the energy credits (now referred to as green by many in the sustainability arena) are available for individuals.  However, the larger ticket items are generally a result of material investments on behalf of individuals or businesses that are looking at a long term program.

Some of the green advantages are outside of the tax credit arena and the financial benefits can be noticed immediately and long term.  In a recent seminar I facilitated in Columbia before Christmas, one of the participants told us that because of the overall emphasis on going green, the institution was able to avoid laying off any employees in 2010.  That was very encouraging to hear.

The individual tax credits that are at a 10% level (and most have a cap of $500) are as follows:

  • Biomass Stoves
  • Heating, Ventilating Air Conditioning (HVAC)
  • Roofs Made of Certain Materials (Metal & Asphalt)
  • Non Solar Water Heaters
  • Windows and Doors

These products must meet certain manufacturer specification and the taxpayer should keep the documentation upon purchase.

The healthier tax credits are at 30% with no upper limit.  A 30% tax credit is give for the cost related to existing homes or new construction or business structures for:

  • Geothermal Heat Pumps
  • Small Wind Turbines (Residential)
  • Solar Energy Systems

The state of South Carolina also has a 25% tax credit, but is limited to $3,500 per year and allows a carryover for credits not used.  The federal 30% credit also has a feature whereby the taxpayer can apply for a check from the U.S. Government, if their income tax is not anticipated to reach the level of 30% of the expenditure.  There are certain restrictions, but this is a very generous feature.

Also, certain fuel cells allow for a 30% credit for residential systems, but have a $500 cap.

There are a number of automobile incentives but they are difficult to describe.  Usually the dealer will educate the buyer.

 Blogger: Charles “Eddie” Brown,  SwaimBrown, PA

Editors Note: Related links for further information below

 

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The South Carolina Association of CPAs is a professional organization that provides support to all CPAs – whether in public practice, industry, government or education - with lifelong learning opportunities necessary for their success, the promotion of high ethical standards and legislative advocacy for both the public good and for the profession.
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One Response to Energy Credits

  1. Pingback: Weekly State Society Blog Roundup - March 4, 2011 CAMICO - THE SAVVY CPA

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