Business Tax Incentives

Solar Energy Systems

What are the tax incentives for commercial solar systems?

Businesses are eligible for tax credits for qualified solar water heating and photovoltaic systems, and for certain solar lighting systems. Qualifying equipment will either use solar energy to generate electricity, to heat/cool or provide hot water to a structure, or will use solar energy to illuminate the inside of a building by means of fiber-optic distributed sunlight (tube systems and passive solar are not eligible). The credits are available for systems "placed in service" between January 1, 2006 and December 31, 2016.

Note: This is a basic guide to the credit. For more detailed information, go to www.seia.org and download the Guide to Federal Tax Incentives for Solar Energy, or click here for recent FAQs regarding the new legislation.

Who is eligible for the tax incentives?

The tax credits go to businesses that install solar equipment for their use.

What are the incentives and how do they work?

The tax credits are for 30% of the cost of the system. For individuals the maximum credit is $2000 for photovoltaic systems and $2000 for solar water heating systems in any tax year. After December 31, 2008, the cap on photovoltaic systems ONLY will be removed. To qualify, residential systems must meet certain criteria as follows:

Solar water heating:

Photovoltaic systems:

Alternative Minimum Tax and the Residential Solar Tax Credit

According to SEIA, the new legislation passed in October of 2008 "allows the ITC to be used to offset both regular and alternative minimum tax (AMT) and waives the public utility exception of current law (i.e., permits utilities to directly invest in solar facilities and claim the ITC)."

What do I have to do to qualify for these incentives?

IRS Forms

Where can I learn more about qualifying products?

Good sources of information about these systems include:

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