The Inflation Reduction Act, also called IRA, was signed into law by President Joseph R. Biden on Aug. 16, 2022. As America’s clean energy economy and manufacturing sectors grow, the IRA lowers energy costs for small businesses and families. Excitingly, the act provides $391 billion to address climate change by investing heavily in clean energy. Furthermore, it offers $8.8 billion in rebates specifically allocated for home energy efficiency and electrification projects. As the most aggressive climate action in US history, the act aims to reduce carbon emissions by 40% by 2030. The Inflation Reduction Act includes several provisions that can save small business owners on the cost of energy.
Switch to Solar
There are numerous benefits to switching your business’s power source to solar. Since solar power is a renewable and clean resource, it does not produce dangerous greenhouse gas emissions. Therefore, using solar energy dramatically reduces your business’s carbon footprint.
Solar is highly beneficial to your business because generating its own solar power saves energy bills. The company is no longer dependent on fossil fuels and, thus, no longer vulnerable to the volatile prices of these fuels. In some cases, the business could generate more energy than is used and sell it back to the grid. Moreover, solar panels are durable and need very little maintenance. They are a dependable source of energy.
The only drawback of switching to solar power is the upfront installation cost. However, the IRA has devised a solution to mitigate these costs. When your small business switches to solar energy, you’ll receive a tax credit covering 30% of the installation costs. Therefore, there is no reason that your company should not make the switch.
Update Vehicles to Electric
Electric vehicles (EVs) are great for your business transportation needs. They produce fewer greenhouse emissions than gasoline or diesel vehicles. Furthermore, they create a healthier environment by reducing the amount of pollutants in the air. In addition to the many environmental advantages, EVs are great for business owners. They lower fuel costs and require less maintenance than standard vehicles; oil changes will be in the past!
Excitingly, the IRA incentivizes small businesses using large vehicles such as vans and delivery trucks to switch to electric vehicles. Now, companies enjoy a tax credit covering 30% of the purchase costs of these vehicles. The tax credit will help when making the initial investment switch to EVs for your company.
Make Energy-Efficient Improvements
The IRA has increased the 179D tax deduction, which offered $1.88 per square foot to construct energy-efficient commercial buildings. It is now $5 per square foot. Moreover, along with energy-efficient ground-up construction, energy-efficient retrofits of older buildings are also eligible. It used to be that only government building owners were allowed to allocate the 179D tax deductions to their specified architects, engineers, and designers. However, now tax-exempt building owners, such as non-profits, have the freedom to allocate the 179D tax deductions to their designers.
The Inflation Reduction Act incentivizes small businesses to help create a greener future. These unprecedented measures to address climate change promote economic stability and expansion for small businesses nationwide. Want to learn how our team at Electrification Corporation can assist your company in becoming more sustainable? Contact us today for your consultation.