Opportunity Zones + Solar = Double Tax Savings for Your Business

Opportunity Zones are a little known investment tool that could help your business install renewable solar energy while saving big on taxes and rising energy bills.

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 will realize when you officially stop renting overpriced energy from the utility company. Plus, there’s that whole saving the planet part and getting to brag to your customers about how your business is helping to offset millions of pounds of carbon emissions. Just imagine the press release!

drone shot of large commercial building roof with solar panels

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 are missing out on.

But, if your business (or future business) is in one of the thousands of recently designated Economic Opportunity Zones across the United States, the payoff for installing commercial solar is even brighter.

What are Economic Opportunity Zones?

Economic Opportunity Zones are a community investment tool that was introduced as part of the Tax Cuts and Jobs Act of 2017. There are currently over 8,700 Opportunity Zones spread across every state in the country. Their purpose is to encourage long-term investments in low-income urban and rural communities across the U.S. by providing 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 designed to revitalize the areas of America that aren’t being invested in. 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 an owner of a small or medium-sized business, you know how important those tax benefits can be.

Tax Incentives for Installing Solar in an Economic Zone

Opportunity Zone incentives can be applied 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 (batteries that help maximize solar energy availability) can be eligible for these tax incentives.

auto mechanic business with solar array on roof

So, what exactly are the tax incentives for investing in Opportunity Zones? According to the Economic Innovation Group there are 3 main incentives:

  1. 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.

  2. Reduced Capital Gains
    The basis steps up by 10% if the investment is held for at least five years, and by an additional 5% if held for at least seven years.

  3. No Capital Gains Tax on Profits
    A permanent exclusion from taxable income of capital gains from the sale or exchange of an investment in a qualified opportunity zone fund, if the investment is held for at least 10 years.

Keep in mind that these tax incentives are outside the many other solar-specific federal and state incentives you can take advantage of this year.

Map of Economic Opportunity Zones

economic development opportunity zone map

Here is an overview of the over 8,700 Economic Opportunity Zones across the United States. To zoom in and take a closer look at each individual city and neighborhood, go to the interactive Opportunity Zone map.

How to Take Advantage of Opportunity Zone Incentives with Solar

To qualify for the Opportunity Zone Incentives, you must establish a Qualified Opportunity Zone Fund. If your business or future business lies in an Opportunity Zone, Moxie Solar can help you take advantage of the many tax incentives for installing solar. We have a team dedicated to finding all applicable solar incentives and even help file the paperwork for you. All you have to do is sit back and enjoy the savings!

Give us a call at 855-669-4387 or request a solar consultation online.