What is MACRS? All you need to know for your commercial solar installation

If you are a homeowner who is thinking of going solar, you would be glad to find pretty straight forward incentives in America. There are federal investment tax credit, net metering and also the local utility incentives and government rebates. Because of these incentives and lower cost of commercial solar power systems, you would see a payback period of eight years!

On the other hand, if you are a business who is seriously considering going for solar energy, then you would find additional tax incentives as well. This will help to decrease the time it usually takes for solar investment to pay off completely. The most commonly known among these incentives is the Modified Accelerated Cost Recovery System, or as we call it the MACRS.

MACRS? What is it?

The MACR or Modified Accelerated Cost Recovery System is a type of asset depreciation. Now you must be guessing the meaning of ‘depreciation’, for that we recommend you to listen to the International Revenue System.

According to the international Revenue System, the depreciation is the deduction of income tax, which allows a taxpayer to recover from the cost or any other basis of a property. It is basically an allowance for wear and tear occasions.

In simpler words, the value of any of your physical assets, like a car or TV will decrease over time. In the law of tax, depreciation is a method by which you lower the taxable earnings of yours.  By this way, you take the amount off the value of your asset and allocate it to a certain time period.

But how does MACRS work for solar?

Now, this is a good question!

The MACRS would allow you to easily recover the costs over an accelerated period, in case of solar it is five years. Therefore, it can be said that in the case of solar investment, you are investing in it and lowering the amount of tax that you generally spend on solar for more than five years. MACRS benefits you, especially when you are reducing your tax spendings in a given year.

The SEIA or the Solar Energy Industries Associations provides you with very useful guidance on how you can apply MACRS to businesses that are investing in solar. You also need to consider how the solar investment tax credit(ITC) would influence the investment you want to depreciate.

This is particularly true, if you are claiming ITC on the solar project of yours, you will be reducing the amount of investment that can be depreciated by half of the claimed total ITC value.

How much can you save with MACRS in your businesses?

 The MACRS helps most of the businesses to save up to 25% or more on their solar cost. If this is further paired with ITC, it means you are saving nearly 50% of the upfront cost of solar. In many states such as California, this additionally provides you with an accelerated time of recovery. In other words, the benefits of going solar can enable you to reduce the upfront costs by three-quarters of every spent dollar.

Go and get the solar project for business!

If you are curious to find out how much you can save at your business through solar, you should commence today with USA Solar Power!

You can easily get yourself registered through our website and we will accompany you through the entire process of going solar. We will make sure you are provided with everything, from the information of our installers, providing the custom quote to helping you switch.

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