Asheville is a hub for sustainability, with many businesses adopting eco-friendly practices to reduce their environmental footprint. Beyond the ethical and environmental benefits, green initiatives can lead to significant tax savings. This guide explores federal, state, and local tax incentives available to Asheville businesses that embrace sustainability, helping you cut costs while contributing to a greener future.

1. Federal Renewable Energy Tax Credits

The federal government offers the Investment Tax Credit (ITC) for businesses that invest in renewable energy systems, such as solar, wind, or geothermal energy.

How It Works:

  • The ITC allows businesses to deduct 30% of the cost of installing a renewable energy system from their federal taxes.

Eligible Systems Include:

  • Solar panels and solar water heaters.
  • Small wind turbines.
  • Geothermal heat pumps.

Example:
An Asheville café installed a $40,000 solar panel system and claimed a $12,000 federal tax credit under the ITC. They also saved on energy bills, reducing annual utility costs by $5,000.

Pro Tip:
Combine the ITC with local incentives to maximize savings.

2. Energy-Efficient Equipment Deductions

Under Section 179, businesses can deduct the full cost of energy-efficient equipment and property upgrades in the year they are purchased.

What Qualifies as Energy-Efficient Equipment?

  • HVAC systems.
  • Refrigeration units.
  • LED lighting installations.

Example:
An Asheville brewery upgraded its refrigeration system for $20,000. They deducted the full cost under Section 179 and qualified for a $2,000 local rebate for energy-efficient equipment.

Pro Tip:
Keep manufacturer certifications and receipts to verify the energy efficiency of your equipment.

3. Local Incentives in Asheville and Buncombe County

Asheville and Buncombe County offer various grants and rebates for businesses that prioritize sustainability.

Local Programs to Explore:

  • Blue Horizons Project: Provides resources and incentives for businesses transitioning to renewable energy.
  • Buncombe County Energy Efficiency Rebates: Rebates for energy-efficient equipment and property improvements.

Example:
A zero-waste grocery store in Asheville received a $5,000 grant from the Blue Horizons Project to install energy-efficient lighting and reduce waste.

Pro Tip:
Check with local programs annually, as incentives and funding availability may change.

4. Electric Vehicle (EV) Tax Credits

Asheville’s focus on reducing carbon emissions has encouraged many businesses to invest in electric vehicles for deliveries or employee transportation.

Federal Incentives for EVs:

  • A tax credit of up to $7,500 for new electric vehicles.
  • Up to $1,000 for installing EV charging stations.

Example:
A local Asheville delivery service purchased two electric vans for $60,000 each, receiving a total of $15,000 in federal tax credits.

Pro Tip:
Track additional savings on fuel costs and maintenance compared to traditional gas-powered vehicles.

5. Commercial Property Assessed Clean Energy (C-PACE) Financing

C-PACE is a program that helps businesses finance energy-efficient upgrades and renewable energy projects through property tax assessments.

Benefits Include:

  • No upfront costs—payments are made over time through property taxes.
  • Eligible projects include HVAC upgrades, insulation, and renewable energy systems.

Example:
A small Asheville hotel used C-PACE financing to install a geothermal heating system, reducing annual heating costs by 40%.

Pro Tip:
Contact your local C-PACE administrator to determine eligibility and financing options.

6. Federal and State Energy-Efficient Building Tax Deductions

Businesses investing in energy-efficient buildings or retrofitting existing properties may qualify for the Energy Efficient Commercial Buildings Deduction (Section 179D).

Eligibility Requirements:

  • Reducing energy consumption by at least 50%.
  • Upgrades to lighting, HVAC systems, or building envelopes.

Deduction Amount:
Up to $5.00 per square foot for qualifying properties.

Example:
An Asheville coworking space installed energy-efficient lighting across a 10,000-square-foot property, claiming a $50,000 deduction under Section 179D.

FAQs About Green Business Incentives in Asheville

1. Can small businesses in Asheville qualify for these incentives?
Yes, many incentives are designed specifically for small and mid-sized businesses.

2. Are there specific grants for renewable energy in Buncombe County?
Yes, programs like the Blue Horizons Project offer funding for renewable energy installations.

3. How do I claim federal tax credits for energy-efficient upgrades?
Claim these credits on IRS Form 3468 (for the ITC) or work with a tax advisor for detailed assistance.

Common Mistakes to Avoid

  1. Failing to Document Upgrades:
    Many businesses miss out on credits due to insufficient documentation.
    Solution: Keep detailed receipts, certifications, and photos of installations.
  2. Overlooking Local Incentives:
    Focusing solely on federal credits can mean missing out on valuable local rebates.
    Solution: Check Asheville and Buncombe County programs annually for updates.
  3. Skipping Professional Advice:
    Miscalculations or missing paperwork can result in denied credits.
    Solution: Work with a tax advisor experienced in green business incentives.

Checklist for Asheville Green Businesses

  • Install renewable energy systems like solar panels or wind turbines.
  • Upgrade to energy-efficient equipment and claim Section 179 deductions.
  • Apply for local grants and rebates through the Blue Horizons Project.
  • Invest in electric vehicles and claim federal tax credits.
  • Explore C-PACE financing for large-scale energy efficiency projects.

Advanced Tips for Maximizing Green Business Savings

  1. Combine Multiple Incentives:
    Stack federal, state, and local incentives to maximize savings on a single project.
  2. Conduct an Energy Audit:
    Identify inefficiencies in your property or processes and prioritize upgrades for the highest ROI.
  3. Plan for Future Credits:
    Monitor upcoming legislation that may expand green tax incentives.
  4. Incorporate Sustainability Into Branding:
    Use your green initiatives as a marketing tool to attract eco-conscious customers and investors.

Conclusion:
Going green is more than an ethical choice—it’s a smart financial decision for Asheville businesses. With the right strategies, you can save on taxes while contributing to sustainability. Let Polaris Tax & Accounting help you navigate federal, state, and local incentives to maximize your savings.

Contact our Asheville office today to schedule a consultation.