Looking for Business Tax Incentives? Try Going Green
If you own a small business, chances are you’re not thrilled about how both your business expenditures and taxes tend to eat away at your profit. The good news is that some expenditures can not only benefit your business, but also reduce your business taxes. If you’re looking for business tax incentives, try going green by taking advantage of Business Energy Investment Tax Credits (ITC), the Modified Accelerated Cost Recovery System (MACRS), and tax deductions from donating used electronics to non-profits.
Business Energy Investment Tax Credits (ITC)
Business Energy Investment Tax Credit refer to a federal program that gives you tax credits for investing in renewable energy equipment. You receive 30% tax credit for solar and small wind equipment and fuel cells, and 10% tax credits for geothermal equipment, combined heat and power and microturbines. As long as you can show that your new equipment meets certain quality standards, you can take these credits the year that it goes into operation. The ITC is in effect until 2023, so there is plenty of time to take advantage of it, and you can also cut energy costs if your business operates in an area where sunshine, wind, etc. are in abundance.
Modified Accelerated Cost Recovery System (MACRS)
The Modified Accelerated Cost Recovery System, as it relates to ITC, allows you to tax a deduction on the depreciation of qualifying renewable energy equipment over a period of five years. This means that it is possible to see a return on renewable energy investment very quickly, compared to equipment investments that depreciate over decades. The renewable energy types that qualify for this deduction include solar, wind, geothermal energy and also microturbines, some fuel cells and hybrid lightning. To minimize business taxes, it is possible to take both the MACRS depreciation deduction of 85% and the ITC tax credit of 30% on your renewable energy equipment.
Donating Used Electronics
You might own a business where you can benefit from new models of electronics every few years, while your used equipment is still fully operational. A great use for this old equipment would be to donate it to non-profit organizations, who will then typically use it for teaching purposes. You can claim a tax deduction for such charity contributions, based on the value of the electronics you’re donating, and you can even get tax deductions for warehousing and shipping costs of donated items.
So if you’re looking for business tax incentives, two good places to look would be at renewable energy equipment types eligible for ITC, especially if they is also eligible for MACRS, and charitable organizations that will accept your old electronics. Going green can benefit the environment and your community and help you achieve something you will love as entrepreneur – lower business taxes.