Using Solar Depreciation to Lower Business Tax Burdens

If you're a business owner in Columbus, Ohio, considering solar energy, there's one benefit you don't want to overlook: solar depreciation. When combined with the federal solar tax credit, commercial solar depreciation can significantly reduce your business's tax liability.

Let’s break it down in real terms — no fluff, just the facts.

What Is Solar Depreciation?

Depreciation is how businesses recover the cost of certain assets over time. Under the federal Modified Accelerated Cost Recovery System (MACRS), businesses can depreciate solar panel systems over a five-year schedule. But thanks to bonus depreciation rules, you can often write off 100% of the system cost in the first year.

How It Works for Commercial Solar in Ohio

When you install a solar energy system, you’re investing in a capital asset. Here’s how the math works:

• Federal Solar Tax Credit (ITC): 30% off the total system cost as a credit.

• MACRS Depreciation: Apply to 85% of the system cost (the rest is adjusted due to the tax credit).

• Bonus Depreciation: Businesses can often deduct the full depreciable amount in the first year.

Example:

Let’s say your system costs $200,000:

• 30% tax credit = $60,000

• Depreciable basis = $140,000 (after ITC adjustment)

• If you’re in a 24% tax bracket, MACRS could save ~$33,600 more in year one.

Total tax benefit? Nearly $93,600 in the first year.

Why This Matters

• Cash Flow: Faster ROI means you can reinvest sooner.

• Protection Against Rate Hikes: Own your power, avoid utility price spikes.

• Peace of Mind: Especially with grid-tied systems and backup batteries.

Bonus: Batteries Qualify Too

At BC Solar, we often include battery systems with our commercial solar installs. Good news: batteries charged exclusively by solar also qualify for the same depreciation benefits. Whether it's a warehouse, bank, or retail location, the tax treatment is a big win.

How BC Solar Helps

We don’t just install panels. We help you:

• Understand your full ROI

• Design systems that qualify for maximum depreciation

• Work with your tax team to document it correctly

You don’t need to be a tax expert — that’s our job.

FAQs

How quickly can I recover my investment in commercial solar?
With tax benefits alone, many systems recoup 40–60% of their cost in year one. Most Columbus-area businesses see full payback within 5–7 years.

Does solar depreciation work without the federal tax credit?
Yes, but it’s most powerful when used with the tax credit. The ITC reduces upfront cost, and depreciation reduces taxable income.

Can I still get solar depreciation if I finance my system?
Yes. Ownership is what matters — whether you pay in cash or finance. The depreciation and tax credit apply as long as you own the system.

Does solar depreciation apply to battery-only installs?
If your batteries are charged by solar, yes. Even battery retrofits tied to an existing solar array can qualify.

Ready to lower your tax bill while securing long-term energy savings? Let's talk.

Call BC Solar at (614) 442-9700 or visit bc.solar