Don't Forget About Commercial HVAC Tax Credits Before the Year Ends – Sobieski Services | DE, NJ, PA, MD

Don’t Forget About Commercial HVAC Tax Credits Before the Year Ends

Taxes, economy, taxpayer

Using modern, high-efficiency HVAC equipment is one of the most effective ways to keep your building comfortable in the Delaware and Maryland area’s winter Nor’easters and summer heat waves. While the upfront purchase costs of new equipment might be off-putting, tax credits do a lot to keep your costs down. In the last few months of the year, there’s still time to take advantage of the HVAC tax credits available for 2016.

Energy-Efficient Commercial Buildings Tax Deduction

As a commercial building owner or tenant you may be eligible for the Energy-Efficient Commercial Buildings Tax Deduction, a federal tax deduction for your investment in energy-efficient technology that’s installed and fully operational by December 31, 2016.

A tax deduction of $1.80 per square foot is available if you install a system that cuts your facility’s total energy expenditures by 50 percent or more compared to the energy costs accrued by a building that meets the minimum requirements set by ASHRAE Standard 90.1-2007.

Alternatively, you could be eligible for a tax credit of $0.60 per square foot if you install a system that would contribute to a total savings of 50 percent if combined with a additional systems.

Eligible systems include:

  • Heating, cooling, ventilation, and hot water systems
  • Building envelope systems
  • Interior lighting systems

Business Energy Investment Tax Credit (ITC)

If you plan to install HVAC equipment that runs on solar, wind or geothermal energy, you could be eligible for a federal tax credit of up to 30 percent of the costs through the Business Energy Investment Tax Credit (ITC). The amount of the tax credits for some types of equipment will be reduced after December 31, 2016 while other tax credits will be eliminated, so it pays to start your installation now.

Currently, the credit for hybrid solar lighting and fuel cells is 30 percent, but this credit won’t be available after December. For small and large wind turbines, the credit is 30 percent. After December, the credit for large wind turbines will be cut to 24 percent, while the credit for small wind turbines will no longer be available.

Install a geothermal heat pump, microtubine or combine heat and power systems this year and you could claim a 10 percent tax credit. This credit will be discontinued after December.

For solar and wind technology, the tax credit expiration date is based on when construction begins. That means as long as you get started by the end of the year, you’ll be able to claim your credit. For other types of equipment, however, the expiration date is based on when the system is installed and ready for use.

Rebates Cut Costs Even Further

Some equipment manufacturers and power companies offer money-back rebates or other incentives to encourage investment in energy-efficient technology.

The New Jersey Clean Energy program offers a Direct Install program to help owners of small to medium-sized commercial buildings upgrade their old, inefficient equipment. The Direct Install program covers up to 70 percent of the cost of replacing HVAC equipment, lighting, and other systems.

In the Philadelphia area, PECO commercial customers who use less than 100kW of electricity each month can qualify for direct installation of higher-efficiency HVAC systems, lighting, and refrigeration systems among other systems.

For Maryland business owners, the BGE Smart Energy Savers Program offers incentives that cover up to 50 percent of the costs of retrofitting room air conditioners, unitary air conditioning systems, chillers, dehumidifiers, and other many other type of equipment.

Our goal is to help educate our customers about Plumbing, HVACR, Fire Protection, and Alarm Systems in Mechanical, Commercial, and Residential settings. For more information about tax credits for HVAC equipment and to view projects we’ve worked on, visit our website!

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