For the first time, the IRA allows non-profits to enjoy the tax benefits long received by taxpaying entities when investing in energy efficiency or renewables projects. The cost of building improvements has gone way down and all of the following are finally within reach: -Lower operating costs-Pristine indoor air quality – preserve health of employees-Comfortable environment – enhance employee productivity, and-Sustainability goals
But wait, non-profits are not taxpayers, is this for real? Yes! There are two types of benefits 1) the Investment Tax Credit, and 2) the Section 179d Tax Deduction. Each program delivers benefits to non-profits through different means.
The Investment Tax Credit for Renewables Projects The ITC applies to investments in solar and battery storage plus an array of other types of renewables.
How much is the ITC? It depends. For solar projects of less than 1MW, it’s 30% of the total installed cost and perhaps more under certain conditions (aka bonus credits).
Projects larger than 1MW start at 6% but can increase to 30% provided the party installing the project: a) pays its workers a prevailing wage, and b) has instituted an apprenticeship program.
How is the ITC Benefit Realized? A “direct pay” mechanism is provided in which the government cuts a check directly payable to the non-profit.
Section 179D for Energy Efficiency Improvements The 179D tax deduction applies to investments in lighting, HVAC, and the building envelope.
How much is the deduction? It depends. Provided certain conditions are met, the deduction can be as high as $5.33 per sq ft, not to exceed the total cost of the installation. The deduction starts out at $.53 per sq ft if savings are 25% and increases up to $5.33 per sq ft if savings of 50% are achieved and the prevailing wage and apprenticeship requirements are met.
How are Section 179d Benefits Realized? The deduction can be assigned to the party that designs the project, such as an architect, engineer, or mechanical contractor. In exchange, the non-profit can negotiate a lower price for the designer’s services in exchange for the assignment.
Note, there are many details which are well beyond the scope of this summary and readers should consult with tax counsel for more details. PowerGreen is not a tax consultant and does not provide tax advice.
For the first time, the IRA allows non-profits to enjoy the tax benefits long received by taxpaying entities when investing in energy efficiency or renewables projects. The cost of building improvements has gone way down and all of the following are finally within reach:
-Lower operating costs
-Pristine indoor air quality – preserve health of employees
-Comfortable environment – enhance employee productivity, and
-Sustainability goals
But wait, non-profits are not taxpayers, is this for real?
Yes! There are two types of benefits 1) the Investment Tax Credit, and 2) the Section 179d Tax Deduction. Each program delivers benefits to non-profits through different means.
The Investment Tax Credit for Renewables Projects
The ITC applies to investments in solar and battery storage plus an array of other types of renewables.
How much is the ITC? It depends. For solar projects of less than 1MW, it’s 30% of the total installed cost and perhaps more under certain conditions (aka bonus credits).
Projects larger than 1MW start at 6% but can increase to 30% provided the party installing the project: a) pays its workers a prevailing wage, and b) has instituted an apprenticeship program.
How is the ITC Benefit Realized? A “direct pay” mechanism is provided in which the government cuts a check directly payable to the non-profit.
Section 179D for Energy Efficiency Improvements
The 179D tax deduction applies to investments in lighting, HVAC, and the building envelope.
How much is the deduction? It depends. Provided certain conditions are met, the deduction can be as high as $5.33 per sq ft, not to exceed the total cost of the installation. The deduction starts out at $.53 per sq ft if savings are 25% and increases up to $5.33 per sq ft if savings of 50% are achieved and the prevailing wage and apprenticeship requirements are met.
How are Section 179d Benefits Realized? The deduction can be assigned to the party that designs the project, such as an architect, engineer, or mechanical contractor. In exchange, the non-profit can negotiate a lower price for the designer’s services in exchange for the assignment.
Note, there are many details which are well beyond the scope of this summary and readers should consult with tax counsel for more details. PowerGreen is not a tax consultant and does not provide tax advice.
Contact PowerGreen to start a conversation about your building's clean energy transition.
Contact PowerGreen to start a conversation about your building's clean energy transition.
