Federal Corporate Tax Incentives for Renewable Energy (Last Modified: 02-12-2008)
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Federal - Internal Revenue Service - Business Energy Tax Credit
Applicable Sectors: Commercial,
Industrial,
The federal Energy Policy Act of 2005 (H.R. 6) expanded the federal business energy tax credit for solar and geothermal energy property to include fuel cells and microturbines installed in 2006 and 2007, and to hybrid solar lighting systems installed on or after January 1, 2006. These provisions of the tax credit were later extended through December 31, 2008, by Section 207 of the Tax Relief and Health Care Act of 2006 (H.R. 6111). (A 10% federal energy tax credit was available to businesses that invested in or purchased solar or geothermal energy property in the United States prior to January 1, 2006.)
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Federal - Internal Revenue Service - Modified Accelerated Cost-Recovery System (MACRS)
Applicable Sectors: Commercial,
Industrial,
Under the Modified Accelerated Cost-Recovery System (MACRS), businesses can recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. For solar, wind and geothermal property placed in service after 1986, the current MACRS property class is five years. With the passage of the the Energy Policy Act of 2005, fuel cells, microturbines, and solar hybrid lighting technologies are now classified as 5-year property as well. 26 USC § 168 references 26 USC § 48(a)(3)(A) with respect to classifying property as "5-year property" and EPAct 2005 added these technologies definition of energy property in § 48 as part of the business energy tax credit expansion.
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Federal - Internal Revenue Service - Renewable Electricity Production Tax Credit (PTC)
Applicable Sectors: Commercial,
Industrial,
The Renewable Electricity Production Credit (PTC) is a per kilowatt-hour tax credit for electricity generated by qualified energy resources. Enacted as part of the Energy Policy Act of 1992, the credit expired at the end of 2001, and was subsequently extended in March 2002 as part of the Job Creation and Worker Assistance Act of 2002 (H.R. 3090). The tax credit then expired at the end of 2003 and was not renewed until October 2004, as part of H.R. 1308, the Working Families Tax Relief Act of 2004, which extended the credit through December 31, 2005. The Energy Policy Act of 2005 (H.R. 6) modified the credit and extended it through December 31, 2007. In December 2006, the credit was extended for yet another year (through December 31, 2008) by Section 207 of the Tax Relief and Health Care Act of 2006 (H.R. 6111).
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Federal - Internal Revenue Service - Residential Energy Conservation Subsidy Exclusion
Applicable Sectors: Multi-Family Residential,
Residential,
According to Section 136 of the IRS Code, energy conservation subsidies provided by public utilities, either directly or indirectly, are nontaxable: "Gross income shall not include the value of any subsidy provided (directly or indirectly) by a public utility to a customer for the purchase or installation of any energy conservation measure."
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