Tax Credits

Federal Tax Credit

The Investment Tax Credit (ITC) for fuel cell technology provides business property owners with a credit of 30% of the cost of the fuel cell units or up to $3,000 per kW, whichever is lower. The credit expires on December 31, 2016.

The ITC entitles the taxpayer to subtract the amount of the credit (dollar-for-dollar) from total federal tax liability. A tax credit is different from a tax deduction – which subtracts money from gross income before tax liability is calculated.

Allowance of credit is permissible against the Alternative Minimum Tax. This allows persons subject to AMT to take the credit against that portion of their tax liability.

Following are two examples of how the ITC could work:

1. Assume a price of $100,000 for 10 5kW fuel cell power units.

• 30% of total system price ($100,000) = $30,000
  or
• 50kW x $3,000 = $150,000

Incentive = $30,000

2. Assume a price of $600,000 for 10 5kW fuel cell power units.

• 30% of total system price ($600,000) = $180,000
  or
• 50kW x $3,000 = $150,000

Incentive = $150,000