Solar farms can receive a valuable return on investment with reduced electricity bills and maintenance costs. With reduced disruption and carbon emission, it provides better habitat for wildlife and plantation. Furthermore, this advancement can further facilitate a guaranteed income giving farmers a competitive edge. Here are the incentives you can opt-in to subsidize a solar-powered farm.
Connecticut Solar Incentives
Businesses like farms receive subsidies for adopting solar energy to promote reliable and sustainable energy. Not only that, but it can also produce jobs and reduce solar prices, making it accessible to everyone. These incentives ensure that this emerging industry grows to live long enough into the future.
Here are the incentives the farms in CT can get for going solar.
Federal Tax Credits
Both businesses and homeowners can enjoy the tax credits provided by the US government. This year, you can be entitled to up to 26% tax credit to cover your solar system installation. It is essential to inquire about this as early as possible, for it will decrease in the future. So if you decided to go solar in 2021, you could only earn a 22% tax credit instead.
For instance, if your overall solar installation costs amount to $20,000, you can receive a $5,200 tax credit. Your tax bill could be reduced to zero and receive the excess if you owed less than $5,200 for that year.
Property Tax Exemption
The property tax exemption applies to residential homes limited to four units and commercial spaces with hydropower units, including farms. Besides the annual electric bill savings, installing an elaborate solar energy system on your establishment can increase its property value. Having this exemption prevents you from paying more property taxes for installing solar panels on your roof. You only need to file a claim to the assessors’ board before its deadline on November 1 to become eligible.
Sales Tax Exemption
Connecticut residents and business owners are also offered sales tax breaks from going solar. Not only it makes going solar more economically feasible, but this also indicates a 6.35% savings right off the bat!
Another way for businesses to recover solar installation costs is through depreciation, classified as expenses deducted from your taxable income. For small businesses like farms, Modified Accelerated Cost-Recovery System (MACRS) is the most feasible. It allows commercial solar systems to depreciate over a 5-year accelerated rate schedule.
Sale/Assignment of REAP Tax Credits
The US Department of Agriculture provides financial aid to small agricultural producers to construct renewable energy systems like solar panels. This valuable program is called the Resource Enhancement and Protection (REAP) program. These grants can cover up to 25% of the overall costs of the proposed project. To qualify, they should provide proof of sufficient revenue to make up for all the expenses. Although other small businesses in non-rural areas cannot receive grants, all farmers can benefit regardless of location.
It is important to note that you need to wait for a year before selling or assigning credit. It must be at least a year from the date that your credit was approved. You must claim any REAP tax credit returns filed throughout this period.