Uncle Sam Rewards Environmentally Friendly Businesses
By: Gardiner Thomsen CPAs | email
Concerned about global warming and other environmental challenges, many businesses are going “green.” Besides being socially responsible, employers may derive some tax benefits.
- Mass transit passes – Employers may receive tax incentives for offering employees mass transit passes.
- Carpooling – Encourage employees to carpool in a company-owned “commuter highway vehicle.” As with mass transit passes, the maximum tax-free monthly benefit for 2008 is $115 per employee. Certain qualifications apply.
- Telecommuting – Although there is no specific telecommuting tax break for employers, employees may qualify for home office deductions.
- Hybrid vehicles – A company is entitled to a tax credit for buying hybrid vehicles or certain other vehicles using alternative fuel sources. The credit amount for a new hybrid vehicle may range from $250 to $3,400 depending on its fuel economy.
- Energy-efficient buildings – Owners of commercial buildings can make their buildings more energy efficient and qualify for a special tax deduction if certain federally mandated standards are met.
- Energy-efficient equipment – Companies may qualify under Section 179 to deduct up to $250,000 of the cost of energy efficient equipment placed in service in the tax year beginning in 2008. A 50% “bonus depreciation” deduction is also available for new equipment purchased this year.
- Environmental clean-ups – Generally, these costs are treated as capital expenses, however a company may deduct certain qualified expenses for cleaning-up hazardous materials if the expenses were paid or incurred before January 1, 2008.
Many environmentalists don’t believe the tax code goes far enough to encourage “green behavior.” Members of Congress have discussed several new tax breaks such as incentives for wind, solar and other renewable energy sources. With the issue taking on such prominence today, is likely that tax breaks for improving the environment will expand or be extended in the near future. Consult with your tax professional to maximize the benefits for your company.
