How Can Businesses Take Advantage of the Inflation Reduction Act?

March 7, 2023

There’s been a lot of hubbub about what’s in the Inflation Reduction Act (IRA) for homeowners. But what about businesses? Are there any incentives or ways they can save on energy-efficient upgrades?

We’ll cut straight to the chase: Absolutely!

Thanks to the IRA’s passage last year, California businesses can save significantly on energy-efficient upgrades to their buildings–and help the environment in the process. Today, we’re digging into incentives in the IRA that are specifically for businesses so they can make the most of them in 2023. And, when you’re ready to reap the benefits of these savings for your business, the local experts at Brower Mechanical are here to help.

The Federal Solar Tax Credit

Because we get so much sunshine in the Central Valley of California, businesses here are well-positioned to harness the power of solar energy. Solar is great for businesses because, once the necessary equipment has been installed, the energy is free–and it’s good for the environment!

Now, thanks to the Inflation Reduction Act, businesses can save big on solar energy installations. One of the major components of the IRA was its overhaul of the Solar Investment Tax Credit (aka, the ITC) Here’s what businesses should know about the ITC in 2023:

Increased to 30% of total commercial solar costs (including solar panels, installation, other materials, etc.)
No cap, and leftover balances can be rolled over to the following year
Includes both solar and geothermal energy systems
Stand-alone battery storage now qualifies for the credit

179D Tax Deduction - Energy Efficient Commercial Buildings Deduction

In addition to the ITC, the IRA’s Energy Efficient Commercial Buildings Deduction can help businesses save on energy-saving upgrades. This deduction gives businesses a significant incentive to improve the energy efficiency of their building(s). Here are the key takeaways:

Companies that demonstrate energy cost savings between 25%-50% can claim a deduction of $0.50/sq. ft. - $1.00/sq. ft. ($0.02 for each additional percentage point of energy savings)
For companies that meet prevailing wage and apprentice program requirements, deductions are even better, starting at $2.50/sq. ft. for 25% energy savings, with a maximum of $5.00/sq. ft for 50% savings ($0.10 added for each additional percentage point of energy savings)
Modeled savings can be achieved through HVAC and lighting upgrades
Where the old iteration of this deduction was limited to once per building per lifetime, the IRA made it so businesses can now claim this deduction every three to four years if additional upgrades are made

How Brower Mechanical Can Help

Brower Mechanical has over 40 years of experience in the Sacramento area and is ready to support your business with its solar, HVAC and other energy-efficiency needs. We take pride in helping businesses ensure their buildings are comfortable, healthy, and affordable to heat and cool, and strive to build lasting relationships with our clients so they can work with the same team year after year.

With significant savings available due to the Inflation Reduction Act, 2023 is a great time for businesses looking to make their buildings more energy-efficient through solar and HVAC upgrades. Contact Brower today and find out how much you can save.