Residential Renewable Energy Tax Credit
If you own your home or business property, there is a 26% Federal Tax Credit available in years 2021 and 2022. This tax credit is calculated based on the entire cost of the solar installation which may include costs associated with the installation such as electric upgrades, structural enhancements, and/or tree removal. The credit is a dollar for dollar reduction of your tax liability, not simply a deduction to taxable income. The Federal Tax Credit is reduced to 22% in 2023 and 10% in 2024. Businesses can also take advantage of accelerated depreciation (MACRS) on their solar investment which further lowers the net cost of the system. Learn more: https://programs.dsireusa.org/system/program/detail/1235
Solar Renewable Energy Certificates (SRECs)
Another significant incentive to home and business owners is the Solar Renewable Energy Certificates (SREC) program through the State of Illinois. The amount received is based on your system’s production, so systems with a better solar profile will qualify for a higher incentive amount. For system sizes of 10 kilowatt (kW) AC or smaller, the incentive is paid in one lump-sum distribution 9-12 months after system commissioning. Larger systems, over 10kW AC, are paid out quarterly over a five-year period.
The SREC incentive value can represent between 30%-45% of the overall cost of the project. Here is a link to the brochure for the Illinois SREC program, called The Illinois Shines Program: https://illinoisshines.com/
New Prairie partners with Carbon Solutions Group to handle SREC paperwork with the State of Illinois. For more detailed information about Carbon Solutions Group: carbonsolutionsgroup.com/index.html
USDA Rural Energy for America (REAP) Grants
The USDA offers an opportunity to apply for a grant to assist agricultural producers and rural small businesses to complete a variety of clean energy projects including solar installations. This grant can cover up to 25% of the eligible project costs. Please discuss the application process with a New Prairie Solar Consultant. Learn more: https://programs.dsireusa.org/system/program/detail/2511
Modified Accelerated Cost-Recovery System (MACRS) Accelerated Depreciation
Business solar installations can also qualify for a depreciation deduction for income tax purposes. The depreciable basis is the system cost less ½ of the 26% (2021 & 2022) Federal Tax Credit. Also, for 2021 and 2022, there is bonus depreciation of 100% of the basis. Therefore, the entire system cost can be written off in the first year. We recommend that business owners consult with their tax advisor for specific information. It is not unusual for the depreciation benefit to cover 25% of the solar system cost or more.