What is the New Inflation Reduction Act?
The Inflation Reduction Act was signed into law in August 2022 to help the U.S. reach economic stability
The economy never quite recovered after the 2020 Covid Pandemic. Rising costs across the country and many industries led many to believe that another recession was on the horizon. The Inflation Reduction Act was signed into law in August 2022 to help alleviate the country’s financial deficit. In addition to addressing inflation, key provisions encourage businesses to consider sustainability and renewable energy.
The Inflation Reduction Act extends current tax credits for renewable energy through the end of 2024, as well as adds new credits. The majority of the benefits received will come through tax credits targeted at families and small businesses starting in 2023. The credits will also be available for small businesses switching to alternative energy sources, producing alternative energy components, and more.
How the Act will affect renewable energy businesses
Under Title I Subtitle D, the Inflation Reduction Act provides and prolongs targeted tax incentives aimed at the alternative energy sector. Some of these incentives include manufacturing U.S.-sourced materials like batteries, solar, and wind parts, technologies like carbon capture and storage, electrolyzers to make hydrogen, sustainable fuel, and more.
The Act also creates a new Clean Energy and Sustainability Accelerator which will support the deployment of distributed zero-emission technologies like heat pumps, community solar, and EV charging, and will expand opportunities for clean energy entrepreneurship while targeting 50% of the funding to disadvantaged communities. It also encourages workers in the clean energy sector by ensuring laborers and contractors working on improving infrastructure are paid a fair wage, as well as that 10-15% of the labor is done by apprentices.
Many of the tax incentives already passed into law have been modified and extended, so it’s essential to be aware of these new changes.
How the Inflation Reduction Act will help businesses switch to renewable energy options
There are many unique reasons why the Inflation Reduction Act will promote sustainability and encourage businesses to switch to renewable energy solutions. Small businesses will receive a tax credit that covers 30% of the cost of switching to solar, as well as receive tax credits covering up to 30% of the cost of switching to clean commercial vehicles. In addition, small business building owners will be eligible to receive a tax credit of up to $5 per sq ft to support energy-efficient improvements aimed at reducing utility costs.
Additionally, the Act expands the Rural Energy for America program, incentivizing rural small businesses to choose energy-efficient upgrades and clean energy options. The program provides guaranteed loan financing and grant funding for farmers and rural small businesses to switch to alternative energy, as well as purchase energy-efficient equipment.
Is your business ready for the rush?
Are you prepared for the Inflation Reduction Act? What should you do to prepare for the influx of business? While there are many things to consider, here are four main points:
First, make sure your business is active in marketing in your community: How is your social media presence? Your Twitter, Facebook, and Linkedin? Many potential customers visit social media to learn more about companies.
Next, be sure your website has high-quality content. Are you clear about what products you offer? What do you provide that customers may be eligible for tax credits when purchasing? Do you have a working contact page?
Third, be the first to reach out and network with homeowners and small businesses in your community. The Inflation Reduction Act is a heavy piece of legislation with a lot of information. Be the person who educates individuals and businesses in your community about the benefits and how you can help.
Lastly, ensure you have the systems and processes in place that will make it easy to do business with you and consistently deliver results. You will want to have clear, consistent and reliable handoffs from marketing to sales and. sales to service.
Get Started Today
If you want help making sure you’re positioned for growth we’re here for you. Feel free to book a complimentary call and we’ll chat about how we can help you to cash in on these tax credits and incentives.