As businesses find new ways to streamline operations and trim costs, new equipment is often the last priority. Yet business owners overlook a significant opportunity for long-term savings when they outright eliminate all equipment expenditures. Many purchases require an initial investment, but provide reduced costs over time. One such purchase is energy optimization equipment, which allows business owners to reduce their overall utility costs and reduce maintenance downtime and repair costs.
Tax Incentives for Green Energy Purchases
The “Worker Homeowner and Business Assistance Act of 2009” was introduced by the federal government in November 2009. Intended to stimulate the economy by providing tax relief for both businesses and homeowners, the Act modifies how businesses can carry Net Operating Losses (NOL).
NOL refers to deductions granted for expenses that surpass a company’s gross income. Previously businesses could carry their NOL for only three years, but the Act extends that period to five years. NOL-eligible companies may be entitled to quick tax refunds that they can spend on energy improvements.
Meanwhile tax breaks for “green energy” improvements encourage business owners to invest in upgrades that make both structures and equipment more environmentally friendly:
- Adding or replacing insulation
- Upgrading old windows to energy-efficient ones
- Installation of LED lighting
- Placement of environmentally friendly energy sources
Initially these tax breaks were to be offered only through the end of 2008. However, due to the current financial crisis, the federal government opted to extend the tax credit program. The program will continue only until the government runs out of funding for the program.
Advantages of Investing in Energy Improvements
Given the current economic incentives for investing in green energy improvements, now is really the best time for businesses to invest in energy improvements. Although the tax credits themselves are an excellent reason to go green, the long-term savings afforded by energy optimization are also excellent.
- By decreasing electrical waste directly from the breaker, energy optimization increases overall energy efficiency.
- Replacing current appliances with energy efficient ones can drastically decrease power bills for the entire lifetime of the appliance.
- Energy-efficient lighting produces less heat and uses less electricity, for amplified savings.
Because these government programs were instituted in the interest of economic stimulus, they have a limited life span. Business owners who want to benefit should take advantage as soon as possible.