Louisiana Solar Tax Credits – Demystified
Thanks to the Federal “Bail-out Bill” and the “best in the nation” state tax credits here in Louisiana, it is more affordable than ever to get a solar system installed on your home. With our annual hurricane season power outages, it makes even more sense to go solar.
How Do the Tax Credits Work?
Federal Incentives
One of the provisions of The Emergency Economic Stabilization Act of 2008 is the extension of the Investment Tax Credit that gives homeowners 30% off solar systems. This means a credit or direct reduction of the tax you owe. The best news of all is the removal of the $2,000 cap on what the federal government will pay you back (effective 1-1-09). Now residences get the same federal tax credits that business do.
State Incentives
Louisiana will give you an additional 50% off the cost of EACH residential system you purchase up to $12,500 per system. There is no limit to how many systems you can purchase for you to reach “net zero” energy usage. Businesses (such as apartment complexes and nursing homes) that qualify as a residence will also qualify for this tax credit. This credit applies to solar PV (Photovoltaic) systems, solar thermal (hot water heaters) and solar pool heaters as well as wind and geothermal systems. When you combine the Federal and Louisiana state tax credits, you get an effective 80% off the cost of your residential solar system!**
How much will I pay?
For example: a typical 3 kilowatt grid tied system currently costs approximately $22,000 before tax credits. In Louisiana, this type of system will sell clean energy back to the grid and your bill will be credited for the amount of energy your system produces.
Cost of system $22,000*
50% State Tax Credit ($11,000)
30% Federal Tax Credit ($6,600)
You pay $4,400**
*This is an approximation of cost and will vary by the system that you and your solar installer select. The customer is responsible for all up front costs. State tax credits are refundable – less what you owe in state taxes. Tax refunds are considered taxable income by the Federal Tax Commission.
**Please also check with your CPA on your individual tax situation.
Business Tax Credits
Businesses have multiple incentives for going solar. The tax credits for businesses fall into 2 categories – residential businesses (such as apartment complexes and nursing homes) and non-residential businesses. Non-residential businesses get a 30% tax credit from the Federal government. Residential businesses will get an additional 50% Louisiana State tax credit on top of the Federal tax credits, just like homeowners do.
There are also depreciation schedules and grants that make going solar an even more profitable endeavor. Have your CPA look into the MACRS depreciation schedules and you will be amazed at how affordable and profitable it is to purchase a PV solar electric system.
Want more information?
Check out the resources we have gathered for you below. Also, make sure to consult your CPA about your individual tax situation.
Explanation of the Louisiana Solar Tax Credits
Louisiana Solar Energy Society
DSIRE State Tax Credit information
Federal Solar Tax Credit information
DSIRE Federal Tax Credit information
Grants and Depreciation Links
USDA Renewable Energy Grant (REAP)
Rural Energy Guarantee Loan Program (REAP)
IRS Publication 946 –MACRS Depreciation information
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