The new tax plan passed by Congress this year included two provisions which benefit commercial solar installations. The first is a reduction in the corporate tax rate and the second expands depreciation allowances for solar power installations. The new tax plan applies nationally, so it is expected to boost commercial solar installations across the U.S.
As part of this tax bill, the federal corporate tax rate is reduced from 35 percent to 21 percent, the lowest rate in almost 80 years. Typically, if a corporation were to reduce it's energy expenses by installing solar, it would become more profitable, which would increase its tax liability. However, the reduction in the corporate tax rate makes commercial solar installations more financially beneficial than ever before.
The change in depreciation allowances essentially doubles the amount of bonus depreciation that can be claimed on commercial solar installations. Prior to the passage of the new tax bill, one could depreciate only 50% of the value of the new solar system in the first year and the remaining 50% over the next five years. Under the new plan, the allowable bonus depreciation was increased to 100 percent, meaning that one can deduct the entire cost of the system in the first year it is installed. This boosts the ROI of a commercial solar power system and provides increased project value.
Star Solar Specialists installs commercial solar power installations which can provide huge energy savings for your business. With the new tax plan changes, a commercial energy system is more affordable and beneficial than ever before. Learn more about our commercial solar installations here.