2009 Tax Credits
North Carolina Tax Credits
North Carolina currently offers a 35% tax credit for residential and commercial solar applications. It should be noted that you do lose the federal write-off on state taxes paid when you take any state tax credit. This is illustrated in the examples above as "Loss of Federal Write-off." On the residential end, the state tax credit is capped at $1,400 for solar thermal for domestic hot water, $3,500 for thermal systems that provide combined hot water and space heating (tied in to radiant heating systems), and $10,500 for photovoltaic systems. For businesses the cap is $2,500,000 for both thermal and photovoltaic systems. This is a tax credit as opposed to a write-off, and thus results in a direct 1:1 reduction in your state taxes owed. In most cases this credit must be split evenly amongst the first five years of ownership, but may be carried forward if necessary.
Federal Tax Credits
For both residential and commercial applications there is a 30% no cap tax credit available for solar applications. As with the state credit, this credit comes directly off of the amount of income taxes you owe resulting in a 1:1 reduction in the total federal taxes owed in the first year of ownership. This credit can also be carried forward if necessary.
For commercial applications, solar systems are additionally depreciated under the MACRS depreciation schedule. Assuming a 35% tax bracket, this depreciation will account for just shy of 30% of system value. When coupled with state and federal incentives, many businesses see their systems paid for within 4 years and have discounted net present values of 20% or higher!
Commercial Grant/Rebate Option
The 30% Federal Tax credit can be taken as a 30% Rebate/Grant for Commercial Installations. Please visit the DSIREUSA.ORG for more information.
The NC GreenPower program is another state based incentive for photovoltaic solar applications. This program provides a premium to owners of PV systems. The amount varies depending on size and application, but is guaranteed at $0.15 per kWh for standard sized residential applications, and is usually in the range of $0.07 to $0.09 for large scale commercial applications. This payment is in addition the avoided cost payment that the utility is required to pay of approximately $0.05 per kWh, meaning that most residential PV system owners can get $0.20 per kWh for their power production – nearly double current retail rates!*Average Solar Thermal System -
Gross System Cost: $6,400
NC State Tax Credit: - $1,400
30% Federal Tax Credit: - $1,920
Net System Cost: $3,080
*Average Photovoltaic System -- 3 kW PV
Gross system Cost: $25,000
35% NC State Tax Credit: - $8,750
30% Federal Tax Credit: - $7,500
Net System Cost: $8,750