Available Incentives
Business Energy Investment Tax Credit
The credit is equal to 30% of expenditures, with no maximum credit. Eligible solar energy property includes equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Hybrid solar lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are not eligible.
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State of Iowa Tax Credit
Iowa offers an 15% individual tax credit for solar energy systems. The credit is based on the federal tax credits for solar; individuals can claim 60% of the Federal Residential Tax Credit (the federal tax credit is 30%), up to $20,000 for commercial systems.
An individual may claim the tax credit allowed an LLC, S corporation, trust, estate, or partnership that elects to have the income taxed directly to the individual. The amount that the individual can claim is based upon the share of the individual’s earnings of the corporate entity. Excess credits may be carried over for up to 10 years. The cumulative value of the tax credits claimed by applicants under this program and the corporate tax credit is limited to $4,500,000 per year. Because of this limit, a taxpayer must complete an application to reserve the tax credit. Credits will be reserved on a first-come, first-serve basis.
Taxpayers taking a credit under this provision cannot claim a credit under the Iowa Production Tax Credit.
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USDA Rural Energy for America Program (REAP)
Eligible renewable energy projects include wind, solar, biomass and geothermal; and hydrogen derived from biomass or water using wind, solar or geothermal energy sources. These grants are limited to 25% of a proposed project’s cost.
REAP grants are considered a competitive grant and are awarded based on a points system. Current RE is experienced in securing grants and works closely with a successful grant writer who has previously secured nearly $3,000,000 in USDA REAP Grants for renewable energy clients.
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Modified Accelerated Cost Recovery System
Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. A number of renewable energy technologies are classified as five-year property under the MACRS, which refers to ITC to define eligible property. The basis for depreciation is 85% of the Total Project Cost.
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Iowa Alternative Energy Revolving Loan Program (AERLP)
The AERLP provides low interest loans to individuals and organizations who want to build alternate energy production facilities in Iowa. The energy production facility must be located in Iowa. The loans are not available for refinancing existing loans.
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