Unlock Green Savings: Your 2023 Guide to Energy-Efficient Business Deductions

With sustainability becoming increasingly crucial, it’s never been more essential for businesses to think green. The good news? You can actually save money while doing so, thanks to various tax incentives and deductions. In 2023, several key updates have been made to these incentives, which makes now the perfect time to reconsider your business’s approach to sustainability.

The Expanded Energy-Efficient Deduction

This year, the energy-efficient deduction landscape has seen considerable changes. The goal is to incentivize companies to reduce their carbon footprint and transition to renewable energy sources. If you’ve installed energy-efficient systems such as LED lighting, HVAC, or solar panels, you’re in for a treat. This year, the IRS has expanded the energy-efficient deduction, allowing you to write off a significant portion of your investment. If your project qualifies, the Energy-Efficient Commercial Buildings Deduction allows business owners to claim larger deductions per sq. ft. of renovation. Run a non-profit? Tax-exempt organizations can also now claim these deductions.

Solar Investment Tax Credit (ITC)

The Solar Investment Tax Credit has been a mainstay for several years, but its extension into 2023 is excellent news for business owners looking to switch to solar energy. Under this tax credit, you can claim up to 26% of the installation costs for a new solar energy system. Make sure you’ve got all your documentation in order, as specific requirements must be met to qualify for this credit.

Electric Vehicle Charging Stations

Adding an EV charging station to your business property? If you’ve been considering installing an electric vehicle (EV) charging station at your business premises, now is the time to act. Not only is it a great service for your customers and employees, but you can also take advantage of specific deductions for installing these charging stations. If you purchase electric or fuel cell electric vehicles, your business can claim a tax credit of up to $7,500, with the credit increasing up to $40,000 for vehicles larger than 14,000 lbs. Given the upsurge in electric vehicle usage, this can be a long-term investment that pays off in multiple ways.

Material Donations and Recycling

Businesses are increasingly recognizing the value of reducing waste. The IRS now offers deductions for the cost of material donations to qualifying organizations, as well as for implementing effective recycling programs within your company. For example, if you donate furniture or electronics to a registered non-profit, you may be eligible for a tax deduction.

Green Building Design

If you’re planning to build or renovate your office space, why not opt for a green or LEED-certified design? These types of projects often qualify for additional grants and deductions, especially when they contribute to energy conservation or environmental wellness.

Key Takeaways

2023 brings several tax advantages for businesses seeking to be more sustainable:

  1. Mind the Details: Remember that each deduction and tax credit comes with specific requirements and documentation needs. A small mistake can turn a great opportunity into a huge headache, possibly attracting unwanted attention from auditors.
  2. Consult Professionals: Before making any significant changes or investments, consult with both tax and sustainability professionals. Their expertise can help you maximize your deductions and ensure you’re contributing to genuine sustainability.
  3. Think Long-term: These investments are not just about claiming a tax benefit; they’re about creating a long-term sustainable business model that will pay off both financially and ethically in the long run.

Sustainable improvements that also save you money? Sounds like a win-win to us! Schedule a consult to learn how SBK can help!

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