Green Business Bureau

Green Business Certification

December
6

Tax Breaks for Green Businesses

By: marcos@gbb.org

2010 is drawing quickly to a close and it's time to start preparing for your taxes.  As a green business, you're in luck!  There are many tax incentives, deductions and credits available to ease your burden.  The best resource to find tax breaks in your state is: www.dsire.com.  This is a comprehensive database of all federal, state, and sometimes local incentives for energy efficiency.  You’d be surprised at how many options are out there.  Depending on your specific industry and location, you might have to do a little research, but the savings are well worth it. 

The stimulus package passed by Congress in 2009 authorized the Department of Treasury to award some $2.3 billion in tax credits for qualified invenstments in energy production.  As a result of this package, energy efficiency tax credits have been raised from 10% to cost to 30%. 

Federal tax incentives include an energy-efficient commercial buildings tax deduction, a business energy reduction tax credit, an energy-efficient appliance tax credit for manufacturers, and a new energy-efficient tax credit for green-savvy builders. 

The energy-efficient commercial building tax deduction from 2005 offers a tax deduction of up to $1.80 per square foot in buildings which save at least 50% of their heating and cooling energy.  Partial deductions of up to $.60 per square foot can be taken for improvements to the building systems.  

Another tax break involves commuting.  If your employees commute to work or use mass transit, offering commuter benefits allow you, the employer, to save up to 10% on average in payroll tax savings, including FICA, SUI, SDI, and city taxes, for up to $100 per participant per year.  Employees can use tax-free dollars (up to $230 per month) to save up to 40% of their commuting costs.  To calculate your own savings, go to: http://www.commutertaxbenefit.org/calculator_employer.html

Additionally, if your company purchases a “company bike,” or if your employees regularly use a bike to get to work, you can offer up to $20 per month to cover buying, repairing and storing the bicycle and defer about 9.5% of your FICA contribution on the $20 payment.

At the state level, many feel that the federal government is not offering enough incentives for companies to go green.  So they offer their own deals to attract green business/motivate businesses to go green.  Often times they can be far more generous than their federal counterparts.  In some states there is no sales tax on renewable energy equipment produced or sold there.   Many cities, counties, and even communities have begun to offer incentives as well. 

Be sure to explore all of your options and take advantage of the tax benefits you can receive from the sustainable measures practiced by your business.