Preparing Q1: When Should You Consider Energy Tax Incentives?

The United States government has been keen to promote the use of green energy, energy-savings and more sustainable power use practices by employing the tax code as an incentive to businesses that invest in energy-saving practices. Many businesses have the opportunity to exploit a host of tax breaks and credits, but they must know about them, fulfill the requirements and apply. 

If your company missed out on the 26 federal energy tax credits, deductions, accelerated depreciation and tax credit monetization allowances in tax year 2024, or only scratched the surface of savings, the way to secure them for 2025 is to begin preparing as soon as possible.  

Businesses that access these legal tax incentives can boost their cash flow, muscle up their marketing, improve employee retention efforts, expand research and development, cash in the profit or re-deploy the revenue any way they see fit. The earlier they start laying the groundwork, the more likely they will be able to claim the incentives. 

Among the tax breaks available in the tax code are a clean energy production credit, a clean commercial vehicle credit, a clean energy investment credit and a variety of credits for alternative and zero emissions energy production and use. These credits are available to every industry as long as it qualifies. 

One often overlooked and underutilized portion of the tax code is the Section 179D deduction. This valuable deduction is valuable for businesses that own or lease commercial properties and invest in common energy-efficient upgrades. For architecture, engineering, and construction companies, it provides a valuable money-saving tool for energy-efficient building investments.

Many business owners in these industries would be surprised how many of their properties qualify for this deduction. The deduction is worth $5 per square foot, or $50,000 for a single 10,000 square-foot building.