Installing T8 fluorescent lighting is a great way to save on energy costs and taxes simultaneously. The IRS allows businesses that upgrade lighting to T8 fluorescent fixtures and lamps to claim lighting tax credits and offset the cost of upgrading against owed taxes.
T8 credits are part of the Commercial Building Incentives of 2009 and fall into two categories.
Lighting Rebates – Rebates are not typically associated with tax credits, but the T8 credit incentive legislation began with a rebate. Rebate amounts are $1.00 per qualified 28W lamp and $1.50 per qualified 25W lamp. These rebates are paid to the customer at the time of purchase.
Tax Deduction – Businesses can also deduct up to $1.80 per square foot ($0.60 for lighting) of new and existing commercial buildings. Prorated deductions of $0.30 to $0.60 per square foot are also available.
The company that pays for the lighting upgrades to the commercial building is eligible for the T8 incentives. Tax law recognizes both the owner and tenant of the commercial building and authorizes either party to benefit from T8 tax credits. However, only one business can claim the credits per building. The owner claims the tax credits if the owner pays for the upgrades. If the tenant pays for the upgrades, the tenant claims the tax credits.
Tax credits can only be claimed for the year the commercial property was placed in service. Most lighting tax deductions will be applied to and adjusted against a previous year’s tax filing. Upgraded lighting systems must be inspected and certified according to the Energy Department energy savings guidelines. Certified systems then qualify for the tax credit. Guidelines require that a licensed third-party engineer do inspections. Savings must also be calculated using approved software.
While T8 tax credits may be somewhat complex to claim, they can create a nice-sized deduction. Please contact us for more information about lighting tax credits and how to determine if your business is eligible.
