How the Federal Investment Tax Credit (ITC) Works

Businesses across the country and in New York State are utilizing the 26% ITC available for solar energy. This incentive is currently scheduled to decrease to 22% beginning in 2023, and 10% for 2024 and beyond.

In order to claim the tax credit on federal corporate income taxes for a given year, the solar array must be placed in service during that given year. This means that if a business wants to claim the solar tax credit for 2022, they must have their solar array installed and interconnected in 2022, for example.

Each commercial project varies in terms of the timeline required for completion, and the quickest, easiest, and smallest projects typically require a minimum of four months from start to finish. 

What does this mean for businesses? If you’d like to secure your place on our installation list in a given year, our team recommends signing a contract by April or May. If necessary, It may be possible to safe harbor the tax benefit for businesses that sign a contract later in the year.

NY-Sun Program is First-Come, First-Served

Although the ITC tax credit is set to remain the same in 2022, the NY-Sun program is in the form of a block grant, which means it is available on a first-come, first-served basis. The sooner businesses make the decision to go solar, the sooner we can help secure the NY-Sun grant.

The NY-Sun grant will likely be exhausted before the end of 2022, and there is currently no clear plan to replace it.

What About Depreciation?

Solar is eligible for depreciation just like other equipment business purchases. If the solar project is placed in service by December 31st, 2022, businesses can elect to claim a 100% bonus depreciation. But don’t wait—depreciation will be returning to a standard schedule in 2023.

Secure a spot on our installation list this year. Get in touch with the GreenSpark team today.