Take Advantage of IRA Tax Credits for Your Business
On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law. This major legislation provides tens of billions of dollars in a combination of grants, loans, rebates, incentives and other investments to help households save on their energy bills and accelerate the deployment of clean buildings, clean vehicles, clean manufacturing and clean energy. While much of the conversation in the last year has focused on consumer savings, businesses should be aware the legislation lowers the cost for companies to invest in clean energy technologies. Specifically, the IRA includes the following tax provisions for businesses.
Energy efficiency
Commercial building owners can receive a tax credit of up to $5 per square foot (previously $1.88 per square foot) to support energy efficiency upgrades that deliver lower utility bills in new construction or retrofit projects. Eligible energy efficiency measures include lighting, heating, cooling, ventilation, water heating systems and building envelope improvements. These IRA tax benefits for energy efficiency projects can be enhanced with incentives through SWEPCO's Commercial & Industrial Energy Efficiency Programs. SWEPCO's incentive amount is based on the estimated demand and energy savings of a project and is paid once the project has been verified as complete.
Electric vehicles
Businesses with company vehicles can transition to an electric fleet and benefit from tax credits covering 15% of purchase costs for plug-in hybrid electric vehicles and 30% of purchase costs for battery electric or fuel cell electric vehicle models. These IRA tax credits may not exceed $7,500 for vehicles under 14,000 lbs. and $40,000 for vehicles above 14,000 lbs.
Eligible SWEPCO business customers can receive up to two $500 incentives to help cover the purchase and installation costs of Level 2 electric vehicle chargers at an Arkansas services address, up to two $500 rebates at a Louisiana service address and up to two $250 rebates at a Texas service address.
In addition, there's an AEP team ready to support SWEPCO business customers as they transition to an electric fleet. Support includes access to a full fleet assessment, connections to fleet providers and equipment vendors, charging infrastructure requirements and deadlines, and connections to charging station installers. To get started, please call 888.710.4237 or email pev@aep.com.
Solar
Finally, businesses can receive a tax credit that covers 30% of the cost of installing onsite solar power and storage. The credit is comprised of a 6% base credit with the opportunity to increase the credit by 24% for meeting prevailing wage and apprenticeship requirements. There are also 10% bonus credits for meeting domestic content, energy community and low-income community requirements.
We're here to help you take advantage of these tax credits and evaluate what opportunities make sense for your business and sustainability goals. Reach out to your Customer Service Account Representative or Key Account Manager to learn more about your solar options.
For more information on the above tax credits, please refer to the IRS website.
