Article Date:
October 2022

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New Law Improves Energy Tax Benefits for Biz Owners and Landlords

The newly enacted Inflation Reduction Act contains tax credits and depreciation benefits for owners of commercial property and residential rental property.


If you implement various types of renewable energy improvements, you can qualify for hefty tax credits or deductions.


One caution: the rules are complex. That said, bear with the rules because the benefits are worthwhile.


Business Energy Investment Tax Credit


The business energy investment tax credit (ITC) is used primarily for solar panel installations on commercial buildings and residential rentals.


The ITC has been available and continues for small wind power installations, fuel cells, microturbine, waste energy recovery, geothermal, and combined heat and power. The new law extends the ITC to stand-alone battery storage, biogas (such as landfill gas), and microgrid controllers.1


The new law retroactively increases the base ITC from 26 percent to 30 percent of depreciable basis for projects that are placed in service after 2021, provided that construction commences before 2025.2 To realize the full tax credit, you must continue to own the property for five years after the energy installation, or the government will recapture some or all of the credit.3


Special Rule for Larger Energy Projects


To obtain the 30 percent ITC, larger energy projects must comply with new prevailing wage and apprenticeship requirements.4 These apply only to energy facilities with ... Log in to view full article.

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