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Investment Tax Credit

Understanding the Investment Tax Credit

The Investment Tax Credit (ITC) is a valuable incentive for businesses and organizations that invest in clean energy projects. This credit can significantly reduce the cost of installing solar, wind, and other renewable energy technologies.

The ITC is a federal tax credit that allows eligible taxpayers to deduct a percentage of the cost of their clean energy project from their federal income taxes. The credit amount varies depending on the type of project and when it is placed in service.

The Inflation Reduction Act of 2022 significantly enhanced the ITC, making it even more attractive for clean energy investors. Here are some key changes:

  • Increased credit amount: The base credit amount has been increased to 30% for projects placed in service before 2033.
  • Expanded eligibility: The credit is now available for a wider range of clean energy technologies, including standalone energy storage systems.
  • Direct pay option: Non-profit organizations and other tax-exempt entities can now receive the ITC in the form of a direct payment from the government.
  • Bonus credits: Projects that meet certain criteria, such as those located in low-income communities or using domestically manufactured materials, can qualify for additional bonus credits, increasing the total credit value to up to 70% of project costs.

Benefits of Claiming the Investment Tax Credit

There are several reasons why claiming the ITC is a great investment for clean energy projects:

  • Significant cost reduction: The ITC can significantly reduce the upfront cost of installing clean energy technologies, making them more affordable and accessible.
  • Faster return on investment: The ITC can help projects achieve a faster return on investment by reducing the amount of time it takes to recoup the initial investment.
  • Increased project feasibility: The ITC can make clean energy projects more financially feasible, allowing more projects to move forward.
  • Environmental benefits: By investing in clean energy, you are contributing to a more sustainable future and reducing your carbon footprint.

Why You May Not Be Claiming the ITC (and How Roble Can Help)

Some businesses and organizations may not be claiming the ITC because they are unaware of the credit or its recent enhancements. Others may find the qualification and application process to be complex and daunting. Qualified tax professionals often don't have access to the real estate and energy efficiency data they'd need in order to determine eligibility. This is where Roble can help. Our platform and estimator tool make it easy to understand your eligibility and potential savings. We also partner with qualified professionals who can seamlessly guide you through the application process.

Estimating Your Potential ITC Savings

The amount of your potential ITC savings will depend on the type of clean energy project you are undertaking and whether you qualify for any bonus credits.

Example: Let's say you are installing a solar energy system on your commercial building. The total project cost is $1 million. You qualify for the base ITC of 30%, as well as the 10% bonus credit for using domestically manufactured materials. Using Roble's estimator tool, you determine your potential ITC savings to be $400,000 (30% base credit + 10% bonus credit x $1 million project cost).

This example demonstrates the significant financial benefit available through the ITC. By investing in clean energy, you can save money on taxes, reduce your energy costs, and contribute to a more sustainable future.

Ready to learn more? Contact Roble today to see how we can help you maximize your savings with the Investment Tax Credit.