Business & Home Tax Savings With Solar: The Details

Hello and welcome back. This will be a multi-part series on how to save money with Solar, and we will be discussing taxes in as clear and painless way as possible. This article will cover a broad overview of MACRS and the ITC which are 2 large benefits that can save you a considerable amount. I'm Kota from New Dawn Solar, and today we're going to be discussing how your business can save money through solar energy. MACRS (the Modified Accelerated Cost Recovery System) is a depreciation method supported by the United States Internal Revenue Service (IRS) for tax purposes. It allows businesses to recover the costs of certain assets that have lost value, including solar energy systems, over a specific period of time through annual deductions. This allows you to reduce your overhead even more if you've already purchased a system and are looking to save a larger sum of money.

Tax credits and depreciation can be confusing sometimes. We highly recommend consulting with a tax expert about these incentives, so you can be aware of all the benefits and rules that apply. We will also provide a link in the description for the IRS Publication 946 (2022), How To Depreciate Property. For clarity: MACRS only applies to Businesses, and is not for individual use like the Solar ITC.

Homeowners:

Here is an example of how the math works: Let's say you start construction for a $10,000 solar (PV) system, and have it in service prior to 2032. Your solar system is eligible for the 30% ITC. When the Tax Basis (the money you've spent) is $10,000 then the 30% ITC reduces tax liability by $3,000 dollars. This tax credit can be carried forward, for up to 20 years. This isn't bad for an asset where the first ever manufactured modern prototype is STILL outputting electricity six decades down the line.

MACRS can be stacked on top of the reduced tax liability you receive from purchasing solar with the the Federal Solar Investment Tax Credit (ITC), which has been extended to 2032, at 30%. You'll still have to pay this money up front, but that 30% savings of money you have spent on solar can all be claimed and applied to your taxes for a 20 year period until 2032, which is 9 years from now from this time of writing. That's 9 years to plan and take advantage of 2 decades of tax savings. Many solar sales people push the urgency of this- the beauty in reality is that it's a slow burn that can save you a considerable amount on energy and taxes.

Businesses:

After your purchase, you get to depreciate it over 5 years using the federal Modified Accelerated Cost Recovery System (MACRS). The IRS only allows you to depreciate half of your tax credit, so from our previous example, that would be $150,000 out of $300,000. This reduces your taxable income by $850,000 ($1,000,000 - $150,000 = $850,000). This is going to compound. Using the current tax rate of 30%, you'll get an additional $255,000 in depreciation savings over 5 years.

You can also elect a claim for the full depreciation in a single year (The example above was $255,000, but this percentage OR dollar amount might not apply to you! These credits are on a case-by-case basis, and a tax accountant will be more qualified to speak to this). The tax cuts & Jobs act in 2022 increased bonus depreciation to 100% in the first year for eligible projects commissioned and put into service between 2022 and 2032.

In addition, some states offer additional tax credits for solar PV installations. With state credits you will be able to reduce your tax liability for state taxes similar to the federal depreciation schedules. Incentives vary by state. Your ROI to break-even could be as low as 5-6 years. Everything after that period would be putting money back in your pocket, without including selling the power back to the grid.

This will be a multi-part series that will go more in-depth on MACRS as time goes on, so stay tuned if this article has been helpful .We hope that this information is useful to you for upcoming tax seasons, and for reducing overhead. As always, thank you for reading.

(Links)

www.irs.gov/publications/p946

-Kota Chorazak,

NDS Webmaster

Why Solar isn't as Green as You Think

Welcome back,

Today we're going to be discussing solar power and why it shouldn't be considered green energy in America. Solar power is a great option for those who are looking to reduce their carbon footprint, in the long term. With that said, we believe that survival, and providing heat in freezing homes, power to medical equipment, and energy to food production take priority.

It is likely you're wondering why I say that solar shouldn't be considered a source of green energy. While the energy produced by solar panels is in fact green, the energy required to produce them is not. It is critical to consider manufacturing processes if you are planning on reducing your environmental impact. Most panels and components are made overseas of the United States, where the environmental and health regulations are significantly less strict than in the US; making their production not only unhealthy for the environment but also for the workers. This is especially true when it comes to solar systems with batteries, as batteries require lithium which is a very hazardous metal when improperly handled.

Shipping has the largest environmental impact in regards to anything logistical. Solar panels and components are bought and sold in bulk, which causes barges to be used in transit. Barges use some of the dirtiest fuel in the world, and it is estimated that it only takes 15 barges to produce more carbon dioxide than every car in the world, combined. So while the energy produced by the panels is indeed green energy, it could take 50+ years of high usage rates to begin offsetting its carbon footprint and be able to truly be called green energy. Thankfully, the first solar panel ever manufactured is still harvesting energy from the sun to this day. It's use for homes, businesses, and getting off of the grid in times of emergency cannot be overstated, but it is best to know what it will take for the US to use solar in an environmentally friendly way: Buying and building local.

Solar can be green- but that is no selling point. Solar is electrical freedom, and with that freedom we can improve the health of this land. We encourage other energy adoption like hydro-electric in tandem with Solar and home generators for a happier, and more stable electrical grid for all of America.

Welcome to the New Dawn Times

Good afternoon,

I would like to take a moment to introduce myself, and why I see the need for us to have a blog. You're likely wondering why we would even have a blog to start with. My name is Deiven Greer, lead Brand Journalist and Marketing Manager for New Dawn Solar. Throughout the years, our company has seen a dramatic lack of a voice from solar installers on the energy issues facing our country, and we feel it's important for us to speak in as objective and partial a way as we can while acknowledging our bias as a company. We are a solar installation company that values people's right to self-determination, freedom, and electrical capability to go off-grid or support a micro-grid. We intend on using this website as a method of disseminating information about the solar and energy industries, sharing our developments as a company, and covering news as appropriate.

So why should you care? Because our freedoms are shrinking. Our ability to provide power for ourselves is disappearing, and our country has an embarrassment of energy wealth that the average person is losing access to. As a business it is our right and our duty to support not only small business ventures, but also the interests of our customers. I will not be the only person writing on this blog, and each of our opinions may vary, but there is one thing that matters: We care about the freedom of every person in this country.

We look forward to bringing you the latest news in the industry, and hope you'll enjoy reading our thoughts on how to have a happier, more stable electrical grid for you and your family. We look forward to hearing from you, and are active on our social media via LinkedIn,YouTube, Twitter, Facebook, Instagram, and more. Thank you for your time, and we'll be writing to you again soon.

Very Respectfully,

Deiven Greer, Brand Journalist