Sustainable businesses are at the forefront of innovation and growth—and the U.S. tax code now strongly rewards eco-conscious decisions. From solar panels to energy-efficient buildings, there are multiple tax credits and deductions that can help your business thrive financially while helping the planet.
IRC Sections and Relevant IRS Forms
Here are the most important IRS code sections and forms for clean energy and green business incentives:
- IRC §48 – Investment Tax Credit (ITC) for solar, wind, fuel cells, etc.
- IRC §179D – Deduction for energy-efficient commercial buildings
- IRC §45L – Homebuilder credit for energy-efficient new homes
- IRC §45X – Advanced manufacturing production credit
- Form 3468 – General business credit for energy property
- Form 8908 – Credit for energy-efficient homes
- Form 8835 – Renewable energy production credit
- Form 7205 – Credit for electric vehicle refueling stations
Breakdown of Major Sustainability Tax Credits
▪ Investment Tax Credit (IRC §48)
Businesses that invest in eligible energy systems—like solar, geothermal, wind, or fuel cells—can receive a 30% tax credit based on the project cost.
- Use Form 3468
- Property must be placed in service during the year
- Additional bonuses apply for domestic content and low-income areas
▪ Energy-Efficient Building Deduction (IRC §179D)
Up to $5.00 per square foot deduction for energy upgrades to commercial buildings:
- HVAC, lighting, insulation, building envelope
- Applies to both owners and designers of government buildings
- Requires third-party certification
▪ Energy Efficient Home Credit (IRC §45L)
Builders can claim $2,500–$5,000 per qualifying new home that meets certain energy efficiency standards.
- Must meet ENERGY STAR or ZERH certification
- Use Form 8908
- Applies to homes sold or leased during the year
â–ª Clean Vehicle and Charging Station Incentives
For commercial vehicles and EV infrastructure:
- Up to $40,000 credit per zero-emission commercial vehicle
- 30% credit for EV charging stations (in low-income or rural areas)
- File using Form 7205
▪ Advanced Manufacturing Credit (IRC §45X)
Offers per-unit refundable credits for producing solar modules, batteries, wind components, and related hardware within the U.S.
Real Example
Case: A startup installs a $300,000 solar system at their production facility in Texas.
- They qualify for a 30% Investment Tax Credit = $90,000
- File via Form 3468 with their corporate return
- Additionally, they claim MACRS depreciation on the remaining cost basis
Result: They save tens of thousands in taxes while improving ESG compliance.
IRS Compliance: Step-by-Step Guide
- Identify Qualifying Activities
- Renewable energy equipment
- Energy-efficient building retrofits
- EV infrastructure or vehicle purchases
- U.S.-based manufacturing of clean tech
- Get Proper Certifications
- §179D and §45L credits require third-party certification or modeling reports
- Collect Documentation
- Keep all cost records, contracts, certifications, and installation proofs
- Use Correct IRS Forms
- Use Forms 3468, 8908, 8835, or 7205 based on the credit type
- File with Annual Return
- Attach the forms to your Form 1120/1120S/1065 as applicable
Conclusion
Whether you’re installing solar panels or building green-certified housing, 2025 is the year to claim these powerful tax incentives. Don’t miss out on thousands—or even millions—in available federal tax savings.
Call to Action
Anshul Goyal, CPA EA FCA is a licensed Certified Public Accountant in the United States, admitted to practice before the IRS as an Enrolled Agent. He represents clients in tax litigation and is a cross-border tax expert helping American businesses and Indians in the U.S. comply with IRS rules.
Book a meeting with Anshul Goyal here
Disclaimer
This article is for educational purposes only and does not constitute legal or tax advice. Tax laws are subject to change, and your eligibility may vary. Always consult a licensed CPA before making tax decisions.
Top 5 FAQs
1. Can I combine multiple green credits in the same year?
Yes, as long as each credit is claimed for a separate qualifying investment or activity.
2. Are these credits refundable?
Most are non-refundable, but some (like the §45X manufacturing credit) are refundable.
3. Can startups with no income claim these credits?
Some credits can be carried forward, and certain newer credits may allow direct pay or transferability.
4. Do state incentives stack with federal tax credits?
Yes, many states offer their own incentives which can be claimed in addition to federal ones.
5. What if I install EV chargers for employees or customers?
You may be eligible for a 30% federal credit under specific conditions using Form 7205.
About Our CPA
Anshul Goyal, CPA EA FCA is a U.S.-licensed CPA, Enrolled Agent, and Fellow Chartered Accountant. He specializes in clean tech and cross-border tax strategy for startups, ESG-focused companies, and AI-driven businesses. He ensures clients benefit fully from IRS incentives while maintaining audit-proof compliance.