Solar Tax Credit and Solar Grant Programs

Tax Credit Or Cash Grant Equal to 30% of the Cost of Your Commercial Solar Project.

What You Need To Know:

• For 2009 and 2010 projects, solar projects that are eligible for depreciation or amortization (typically those owned by corporate tax filers) can receive a 30% upfront cash grant in lieu of the 30% tax credit. The 30% solar tax credit for individual filers (i.e. residential systems) remains unchanged. The Treasury Department will administer the solar grant program and is required to pay out each solar grant within 60 days of the receipt of each application [Section 1603]. The solar grant is not subject to federal taxes [Section 1104]. There’s no word yet on whether the solar grant will be assignable. The same eligibility of the investment solar tax credit applies; in particular, this means that governmental and non-tax paying entities aren’t eligible. Almost all solar electric PV applications should be eligible, with the lone exception being swimming pool heating.
• For 2009 projects, corporate tax filers can claim 50% bonus depreciation expense [Section 1201(a)]. The remaining 50% of the depreciation basis is expensed according to the 5-year MACRS schedule. The depreciation basis is still 85% of the total system cost (the total system cost less one half of the 30% federal grant) [Section 1104].
• The cap on solar hot water heating equipment has been removed, making it eligible for the full 30% solar tax credit (but not the grant) [Section 1122].
• Projects that benefit from subsidized financing will not have their federal grant reduced [Section 1103]. This will put tax-backed municipal loan programs on safer ground.
• A 30% tax credit for factory equipment used in the manufacture of renewable energy equipment (including solar). The total budget for this tax credit is $2.3 billion [Section 1302].