Business Tax Incentives for Going Green

Business Tax Incentives for Going Green

If you have been considering alternative vehicles or solar energy for your business, you may be able to get some tax incentives for your business. In this article, we’ll look at some of the business tax incentives for going green.

Tax Credits/Deductions

Unfortunately, many people don’t appreciate tax deductions as much as they should because they don’t quite understand them. Basically, a tax credit is a reduction in the tax bill for your business because the credit will be applied against your gross income. For example, if you spend $100 on increasing the energy efficiency of your business, your business tax liability is decreased by $100.

On the other hand, a deduction is applied after your gross income has been figured. Either way, you can decrease your business tax liability by making the most of all credits and deductions you can.

Keep in mind that you’re only going to be able to get credit for equipment or property that you purchase and use for a certain year. You can’t just go out and buy something and then claim the tax credit if you don’t use the item.

Tax Credit for “Green” Vehicles

If you purchase and use vehicles that are environmentally friendly, your business will be eligible for the following tax credits:

Form 8911: Alternative Fuel Vehicle Refueling Property Credit
Form 8910: Alternative Motor Vehicle Credit
Form 8864: Biodiesel and Renewable Diesel Fuels Credit

Tax Credit for “Green” Investments

There are several tax credits you can get for “green” investments as well.

Form 3468: general investment tax credit that covers several things

How to Claim Tax Credits

If you own a small business and file the business taxes as part of your personal return, you’ll want to do the following:

Find the application form for the tax credit and fill it out.
Add information on that form to Form 3800, which is the General Tax Credit.
Add information from Form 38o0 to your tax return.

Deductions are easier, you would just add them under “other deductions” on your business tax return. Of course, you must have certification before or after completing your “green” upgrades.