State and Federal commercial tax incentives

The federal Business Energy Investment Tax Credit (ITC) has been amended a number of times, most recently by the Inflation Reduction Act of 2022. That bill established new prevailing wage and apprenticeship requirements for larger systems to qualify for the full 30 percent tax credit.

The Treasury Secretary soon will issue guidance for these new labor provisions. The table at right offers credits for different project types.

Some of the technologies eligible for tax credits under the ITC include:

■ Solar energy generation

■ Geothermal heat pump systems that meet ENERGY STAR® requirements.

■ Energy storage systems, such as battery-storage installations, both when paired with generation and as a stand-alone system.

■ Thermal energy storage systems.

*Requires that all laborers and mechanics involved in construction are paid wages not less than prevailing wages, and that a percentage of total labor hours are performed by qualified apprentices. Projects under 1 MW (or larger projects that are commenced no more than 60 days after the Treasury Secretary develops labor guidelines) do not need to meet the new labor standards to receive the full tax credit. Such projects that begin construction after 2021 and before 2025 can receive the full tax credit.

**Project must have 100% of steel or iron and 40% of manufactured products produced in the U.S.

***Low-income communities defined by New Markets Tax Credit or on tribal land.

Tax credit and other incentive information may be found at dsireusa.org and rewiringamerica.org

Information is subject to change and is not a substitute for advice or decisions from a tax professional.