The Inflation Reduction Act provides many financial opportunities to American businesses, especially through tax credits from the Internal Revenue Service (IRS). Designed to incentivize renewable energy, the IRA offers breaks for businesses that switch to renewable energy sources, construct buildings with clean energy in mind, switch to clean vehicles, and more.
Let’s take a look at the ways that ecommerce businesses might benefit and how EcoCart can help you gain insight into your impact in order to take advantage of these breaks.
What Is the Inflation Reduction Act (IRA)?
The Inflation Reduction Act, one of a few new climate change laws, seeks to address the climate crisis and promote renewable energy systems while lowering domestic inflation. It hopes to achieve its goal by funding eligible sustainability projects and offering tax credits for clean energy, among other things. The 730-page bill offers quite a few benefits to businesses, and company decision-makers may find some opportunities to finance sustainability initiatives or discover cost savings through tax breaks and clean energy as a result of this act.
Read more: California’s SB 253 Climate Law
Why Is the Inflation Reduction Act Important for Businesses?
There are quite a few ways that ecommerce businesses can benefit from the IRA. It operates under the idea that government investment in American businesses will ultimately result in economic growth. Therefore, the Inflation Reduction Act funds multiple opportunities for companies, either through tax credits or government grants and loans. For most ecommerce businesses, the greatest opportunities can be found in the new tax credits.
Because the IRA’s secondary goal is to reduce greenhouse gas emissions and tackle the climate crisis, most of the benefits provided by the act hinge on sustainability, particularly clean energy. Many businesses can benefit from multiple tax credits offered to companies that switch to renewable energy systems, such as solar power.
EcoCart offers tools to help ecommerce companies improve their emissions while earning tax credits under the Inflation Reduction Act. It supplies key data surrounding your company’s environmental footprint so that you can see where you might improve and, therefore, gain credits.
For example, if you find that your company carries a large carbon footprint associated with deliveries, you might switch to clean commercial vehicles, thereby earning the IRA’s tax credit that covers 30% of the cost of clean vehicles. This way, you can invest in sustainability initiatives that benefit your company while strategically gaining relevant tax credits.
Inflation Reduction Act Benefits
Here are some of the key benefits that ecommerce businesses and small business owners can seek out from the Inflation Reduction Act:
| Benefit | Details |
|---|---|
| Tax Credits for Energy Efficiency | The IRA offers a few different tax credits for businesses that choose energy efficiency. These include:
|
| IRA Funding for Sustainability Projects | Billions of dollars set aside for sustainability projects such as wind farms, solar power projects, and carbon capture technology |
| Health Insurance Support for Small Business Owners | Extension of tax credit support for the Affordable Care Act (ACA) through 2025, potentially alleviating healthcare costs for small businesses |
| IRA Incentives for Clean Commercial Vehicles | 30% tax credit for businesses that invest in commercial vehicles with electric or fuel cell models |
| Enhancements to Supply Chain and Manufacturing | Tax credits for companies that invest in US manufacturers to encourage US manufacturing |
Small business owners should take a close look at the tax benefits offered by the Inflation Reduction Act and begin developing strategies to earn these incentives. If your business has considered making the switch to renewable energy, investing in the efficiency of its buildings, or creating a clean commercial vehicle fleet, then now is the time to pull the trigger and take advantage of these tax credits.
How to Secure IRA Funding for Sustainability Projects
The sustainability projects funded by the Inflation Reduction Act are intended for businesses and non-profits that offer innovations in clean energy and the circular economy. Therefore, the businesses that have earned funding so far have typically been in sectors like renewable energy storage, solar power manufacturing, or clean vehicles. However, if you don’t fall under these categories, it’s still worth it to browse different grants and government funding options, as you may discover one that aligns with your brand.
Before you apply for any U.S. grant, you must first complete the following steps.
- Register your organization with SAM.gov. This is required in order to do business with or receive grants from the U.S. government.
- Register your organization with Grants.gov. After you’ve registered with SAM.gov, you must register Grants.gov. This is where you can find and apply for all grants provided by the U.S. government.
Once you’ve registered with the federal government and appropriate entities, you can find the loan that best applies to your company and its needs.
- Find the grant or loan that you want to apply for. There are a few different government agencies offering loans through the IRA and other initiatives. These include the Department of Energy’s Loan Programs Office, the Environmental Protection Agency, and your local government.
- Prepare the appropriate documentation. Each loan or grant application should detail the appropriate documentation to submit. Some organizations, like the DOE’s Loan Programs Office, offer pre-application consultation appointments to help you ascertain your eligibility and procure the correct documents.
- Apply for the grant or loan. For this step, you might consider hiring a professional, such as a grant writer, to help you. The way you present your application matters, and they will help you put your best foot forward.
- Accept the loan and its parameters. If you are awarded the grant or loan, there will be specific rules that you must adhere to, so make sure to read the fine print before accepting it.
- Remain compliant. Your company will be monitored to ensure that you use the funding the way it’s intended.
ESG reporting software can help you through this process. It allows you to have real-time and readily available ESG data so that you can more easily put together your application. Furthermore, sustainability reporting software highlights areas that can be improved so that you can develop a sustainability program that may be eligible for other funding opportunities.
Sustainability Reporting by Business Size
As your company strategizes ways to take advantage of the tax credits from the Inflation Reduction Act, a good first step is to conduct a sustainability audit and determine your biggest areas of environmental impact. From there, you can determine which clean energy tax break to take advantage of and where you need to invest in your company to become eligible.
Here are the ways that EcoCart can help, no matter your business size.
Up to $50K in total monthly revenue
Small businesses that see $50,000 in monthly revenue or less can usually handle their sustainability reporting themselves. These companies carry a smaller impact that’s more easily traceable. To facilitate this, EcoCart offers software that consistently tracks and measures your carbon footprint as well as carbon offsetting projects so that you can take responsibility for the carbon emissions that you cannot yet eliminate from your operations.
Read more: How to Obtain ESG certification for Your Ecommerce Business
$50K-$100K in total monthly revenue
Mid-sized businesses can still track their sustainability impact on their own, but they may benefit from additional software and resources for a holistic view of their impact. Tools like a Life Cycle Analysis can help these companies gain perspective of each product’s impact so that they can strategize ecodesign choices that improve their environmental footprint. For these companies, EcoCart also offers marketing resources to help them effectively communicate sustainability efforts to their customers.
Over $100k in total monthly revenue
Bigger companies carry a greater impact that’s more difficult to track. These businesses benefit from a sustainability partner that can build a unique sustainability program to fulfill their needs. EcoCart creates a high-level sustainability strategy that integrates exact route tracking for multiple vehicles for a comprehensive sustainability framework. This way, you can not only achieve your business sustainability goals but also build a roadmap for the future.
No matter your business size, EcoCart has the tools that you need to reach your ecommerce carbon emissions goals.
Final Thoughts
Ecommerce companies that are actively working toward sustainability goals can find many benefits from the Inflation Reduction Act. Don’t let these tax credits pass you by. EcoCart offers plenty of tools to help you track and measure your carbon emissions and environmental impact so that you can create a data-driven sustainability strategy that not only improves your impact but earns tax incentives as well.
Want to learn more? Reach out to our team for a demo today.
