California Bans Diesel Trucks

Starting in 2036, the sale of new diesel trucks will be banned.

As the world grapples with the effects of climate change, California has taken a bold step toward reducing its carbon footprint. The state recently made headlines with its legislation to ban the sale of new gasoline-powered cars starting in 2035 and new diesel trucks starting in 2036. This move is part of California's efforts to tackle climate change and reduce greenhouse gas emissions. But what does this mean for businesses, and how can they prepare for this shift towards clean energy and electric vehicles (EVs)?

At Huff Energy Solutions, we believe that solar canopies for EV charging stations and EV infrastructure are a key part of the solution. Our PowerShingle product is specifically designed for commercial users, providing shade and protection for EV charging stations and customers while generating clean energy from the sun. But there's more to the story than just the benefits of our product – it's also important for businesses to take advantage of current tax credits for solar installations and EV infrastructure before they expire.

Businesses have a significant financial incentive to invest in solar energy thanks to the Investment Tax Credit (ITC). The current ITC for commercial solar projects is 30%, which means that businesses can claim 30% of the cost of their solar installation as a credit against their federal income tax liability. This credit is available for both purchased and leased solar systems. Moreover, businesses can receive an additional 10% ITC if they invest in solar products that are manufactured in America, like our PowerShingle product, thanks to the Inflation Reduction Act of 2022. In addition, a business may qualify for an additional 10% ITC if their project is located in an “Energy Community” and may earn an additional 10% if their project is located in a low-income community as defined by the New Markets Tax Credit or on Indian Land.

In total, a business or investor can potentially claim up to 70% of the cost of their PowerShingle solar canopy installation as a credit against their federal income tax liability.

However, the ITC is being phased out over time. The credit will lower to 26% in 2033 and again to 22% in 2034. The credit will be eliminated at the end of that year if it doesn’t receive another extension. This means that businesses have a limited time to take advantage of these tax credits before they expire.

Furthermore, if your PowerShingle solar canopy project is located and developed in a “Qualified Opportunity Zone,” you may receive additional tax incentives such as a capital gains tax deferral and elimination of taxes on future gains. An investor that re-invests capital gains into a Qualified Opportunity Fund (QOF) can defer the payment of federal taxes on the realized gains of the investment as late as December 31, 2026, and depending on the timing of a taxpayer's investment and the period the investment is held, up to 10% of the taxpayer's rolled gain may be permanently exempt from taxation. If they hold their investment in a Qualified Opportunity Fund for at least ten years, they will not be required to pay federal capital gains taxes on any realized gains from the investment.

In addition to the federal tax credits, the California Senate Transportation Committee has passed a bipartisan bill, Senate Bill 49, aimed at supporting the development of solar over parking lots and along highways throughout the state. The bill, introduced by Senator Josh Becker, was unanimously approved by an 11-0 vote and aims to make it easier for California to develop energy storage, transmission, and state capacity while reducing the need to disturb undeveloped land. SB 49 includes two main provisions. Firstly, it provides a sales tax exemption for the materials to build solar canopies over parking lots. Secondly, it requires the state to develop a plan to make its highway rights-of-way available for solar, energy storage, and transmission infrastructure. The bill will next be reviewed by the state senate’s Appropriations Committee.

With all the tax incentives, PowerShingle is a financial decision that makes sense for any business, developer, architect, financier, and more… Our PowerShingle solar canopy technology provides more energy per square foot with fewer columns and larger spans than any other solar canopy system. Our product offers a large-scale capacity to cover and protect people and their assets in rest areas with an attractive design.

Design Ideas Using PowerShingle Solar Canopies

The urgency to invest in solar energy and EV charging infrastructure is higher than ever, with California's new legislation to ban the sale of new gasoline-powered cars starting in 2035 and new diesel trucks starting in 2036. By installing our PowerShingle product, businesses can generate clean energy, provide shade and protection for EV charging stations and customers, and take advantage of the latest tax incentives. Don't wait to act – contact Huff Energy Solutions today to learn more about how we can help your business make the switch to clean energy and prepare for the future.

Note: The following descriptions are meant to provide a high-level overview of available tax incentives and do not constitute tax guidance. For more information on these provisions, their effective dates, and associated requirements, please see forthcoming guidance from the Internal Revenue Service. This information is hypothetical and is provided for illustrative purposes only. It is not intended to represent any specific strategy, nor is it indicative of future results. Keep in mind that depending on any future tax legislation, capital gains rates at the time of sale in 2026 could be at a higher rate than in 2022. Taxpayers should seek the advice of their professional legal and tax counselors when considering any investment.

Sources of information:

Opportunity Zones FAQs -IRS.gov

Federal Solar Tax Credits for Businesses - Energy.GOV

California Air Resource Board Bans Diesel Trucks - CalMatters.org

Inflation Reduction Act’s Tax Incentives - Treasury.gov

Map of Qualified Opportunity Zones - HUD.gov

Map of Energy Communities - Department of Energy

Map of New Market Tax Credit Locations - U.S. Department of the Treasury

Energy Community Tax Credit Bonus FAQs - EnergyCommunities.gov