At a recent manufacturing and distribution roundtable we spoke about Maximizing Efficient Energy Use and Related Tax Savings. Gary Hogsett, a Senior Energy Management Specialist with Mid-America Manufacturing Technology Center (MAMTC) and national speaker on the topic provided several ideas about how companies can reduce their overall energy costs to add profit to their bottom line. Gary specifically addressed 4 areas of concern that business owners should look at:
- Air compressors. Old air compressors are huge energy hogs and should be updated – the energy savings can be substantial.
- Hot water heaters are kept constantly heating water and in essence burning up money. A switch to a tankless hot water heater can save lots of money over time.
- Lighting. Switching to more energy efficient light bulbs and adding on/off lighting sensors can dramatically decrease the amount of lighting costs.
- Heat Exchangers are prone to malfunction and need to be routinely checked to make sure they are functioning properly as they can be a major source of heat loss.
MarksNelson provided the attendees with 2 ways to save taxes on manufacturing utility bills.
- Most states, including Missouri and Kansas, provide some type of sales tax exemption on utilities used in manufacturing. Methods of calculating the exemption vary from state-to-state.
- For federal tax purposes, companies who make energy-efficiency expenditures related to lighting, heating, cooling, ventilation, and hot-water systems, or to their building envelope, may qualify for a Section 179D deduction.
If you have questions regarding the energy efficiency of your company let us know. I’m sure Gary would be glad to check things out with his thermal imaging gun!
About the author
Joe Wondra specializes in working with manufacturing companies. He provides solutions to help his clients minimize tax burdens, increase cash flow, and maximize profits.