The federal government has been putting various energy tax credits on the books for years. Most of these credits apply to businesses that utilize energy saving measures. A tax credit can provide significant savings. It reduces the actual income tax you have to pay unlike a deduction, which reduces just the amount of income subject to tax. Below is a partial breakdown from the US Small Business Administration website
Tax Deductions for Commercial Buildings
The commercial building deduction appears at new section 179D, which was enacted in the Energy Policy Act of 2005. The provision allows a deduction to a taxpayer who owns, or is a lessee of, a commercial building and installs property as part of the commercial building’s interior lighting systems, heating, cooling, ventilation, and hot water systems, or building envelope. Certification must be obtained to verify that the property installed satisfies the energy efficiency requirements of section 179D.
•IRS Notice 2006-52, Notice 2008-40 and Notice 2012-26 provide guidance on deduction for energy efficient commercial buildings
•There is also another document which provides additional information from the IRS at: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Commercial-Property-Owners-and-Leaseholders-Qualify-for-Energy-Efficiency-Tax-Deduction Now as you can imagine, these are tax code documents so be prepared for some boring reading and/or get your accountant involved.
Tax Credits for Manufacturers
The Tax Relief and Job Creation Act of 2010 modifies and extends the energy efficient appliance credit for certain dishwashers, clothes washers, and refrigerators manufactured after December 31, 2010. Manufacturer’s Energy Efficient Appliance Credit – This credit only affects the manufacturers of certain appliances and not the purchaser.
Tax Incentives for Hybrid, Electric and Alternative Fuel Vehicles
Find out how you can save money through Federal tax incentives on your purchase of a new hybrid, plug-in hybrid, lean-burn, alternative fuel, or electric vehicle. This can be a biggee if your business uses any vehicles.
There are a couple of other documents on this government site which may assist in cutting your business energy expenses
Tips for Energy Efficiency
Lighting
- Turn off lights when not in use.
- Replace incandescent light bulbs with compact fluorescent light bulbs.
- Replace or retrofit non-energy efficient light fixtures.
- Install “occupant sensors” to automatically turn lights off and on
- Install LED (light-emitting diode) exit signs.
- Install timers or photocells on outside lights.
Water Heating
- Insulate hot water holding tanks and hot and cold water pipes.
- Set your water heater at the lowest required temperature
- Find and fix leaks.
Refrigeration
- Perform routine maintenance, such as vacuuming, to remove dust.
- Retrofit or replace old refrigerators and freezers.
Equipment
- Turn off office equipment when not in use.
- Make sure your motors and motor systems are running at optimum efficiency.
- Buy Energy Star Qualified Products
Heating and Cooling (HVAC) Systems
- Make sure your HVAC system is operating efficiently.
- Inspect and clean or replace air filters on a regular basis.
- Adjust the thermostat during unoccupied times or install a programmable thermostat.
- Reduce air conditioning hours
- Use the Energy Star Building Checklist to cut down on energy costs.
Buildings
- Block direct sunlight shining through windows in the summer
- Use fans to help delay or reduce the need for air-conditioning in the summer.
These are a partial list of the recommendations on this site. For the complete list, go to: http://www.sba.gov/content/easy-energy-efficiency-improvements
Of course it still makes sense to get the best rates possible on both your electricity and gas usage. Energy deregulation makes this possible in about half of our country. An energy consultant can assist with cutting business energy costs.
