Opportunity Zones are a little-known investment tool. They could help your business save big on taxes and rising energy bills when you install renewable solar energy.
First, Economic Opportunity Zones aside, the reasons to install solar for your business are plentiful.
There are government incentives (26% federal solar investment tax credit, state tax credits, and renewable energy credits). Then there’s the immediate energy savings you realize when you stop renting overpriced energy from the utility company.
Plus, there’s that whole saving the planet part. You’ll get to brag to your customers about how your business is helping to offset carbon emissions. Just imagine the press release!
When you take a hard look at the numbers, installing solar for your business is likely a no-brainer. It’s just simple math. The longer you put off the inevitable switch to solar, the more money-saving incentives you’ll miss.
But the payoff for commercial solar installation is even brighter if your business (or future business) is in one of the thousands of recently designated Economic Opportunity Zones across the United States.
What are EO Zones?
Economic Opportunity Zones are a community investment tool that was introduced as part of the Tax Cuts and Jobs Act of 2017. The US has over 8,700 Opportunity Zones. Their purpose is to encourage long-term investments in low-income urban and rural communities across the U.S.
EO Zones provide a tax incentive for those willing to put their money to work in these important communities.
In other words, Opportunity Zone incentives are huge tax benefits for revitalizing parts of America. If an investment, like a business installing solar panels, occurs in an Opportunity Zone – that business is essentially able to double-dip on tax benefits. As the owner of a small or medium-sized business, you know how important those tax benefits can be.
Tax Incentives for Installing Solar in the Opportunity Zone
Opportunity Zone incentives apply to a wide range of renewable investment opportunities. The total capital expenditure invested in both a commercial solar panel installation and any connected solar energy storage systems. So a Tesla Powerwall battery system can also be eligible for these tax incentives while maximizing energy availability.
So, what exactly are the tax incentives for investing in EO Zones? According to the Economic Innovation Group there are 3 main incentives:
- Deferred Capital Gains
With temporary deferral, you can defer tax on prior capital gains reinvested in a Qualified Opportunity Zone. You also receive a step-up in basis for capital gains reinvested in a Qualified Opportunity Zone.
- Reduced Capital Gains
The basis steps up by 10% if the investment is held for at least five years. Add an additional 5% if held for at least seven years.
- No Capital Gains Tax on Profits (if the investment is held for 10 years)
Permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified EO zone fund.
Remember, these incentives are beyond the many other federal and state solar incentives.
USA Opportunity Zone Map
Here is an overview of the over 8,700 EO Zones across the United States. Zoom in and take a closer look at each individual city and neighborhood, at the interactive Opportunity Zone map.
How to Take Advantage of Zone Incentives with Solar
To qualify for EO Zone Incentives, you must establish a Qualified Opportunity Zone Fund. If your business or future business lies in an EO Zone, Moxie Solar can help you take advantage of the many tax incentives for installing solar.
We have a finance team dedicated to finding all applicable solar incentives. MOXIE will help file paperwork for you. Then you can sit back and enjoy the savings!
Give us a call at 855-669-4387 or request a solar consultation online.
Our team of solar incentive experts will walk you through qualifying for EO Zone and solar incentives. And check MOXIE’s state incentives page for more info about rebates and tax credits for solar financing in your area.