Looking for yet another way to improve payback on your lighting projects? You might be able to take advantage of tax credits being offered by some state agencies. Certain parts of the country have these beneficial tax credits for customers who participate in energy efficient lighting projects. These programs are scattered throughout the US, but can be quite significant. Even better, these credits are ON TOP of any utility rebates or the Federal EPAct tax deduction for which you may be eligible.

 

State tax credits work differently than the EPAct tax deduction that most people are familiar with. While a tax deduction takes money off your taxable income (so the value depends on your tax bracket), a credit lowers your tax bill dollar for dollar. In other words, if your tax bracket is 35%, a $1,000 deduction lowers your tax bill by $350 but a $1,000 credit lowers the bill by the full $1,000.

 

The example to the right shows the benefits of combining state tax credits with other available tax deductions and rebates. In this example, a 100,000 square foot warehouse is upgrading from 400W metal halide fixtures to 6-Lamp T8 fixtures. This upgrade leads to significant energy savings, over $11,000 annually, giving the project a payback period of 3.4 years.

 

The warehouse also decides to take advantage of the federal tax deduction, local rebates and a state tax credit. With these incentives, the payback period goes from 3.4 years to less than 5 months.

 

 

 

 

 

Example based on a 100,000 sq ft warehouse with (150) 400W Metal Halide Fixtures and going to (150) 6-Lamp T8 High Bay Fixtures. Calculations assume 3,120 annual operating hours and an energy rate of $0.10 per kWh.

*Value of EPAct Tax Deduction is based on a possible tax deduction of $39,000 and a corporate tax rate of 35%