Property Tax Credits and Deductions
Different states phrase their property tax credit regulations differently
but, in most cases, they are similar in practice. For example, some
states on this list exempt entities from the “value added”
by the installation of a specified renewable energy system, while
others state that new, renewable energy equipment will be valued
at no more than a conventional system for the purpose of property
taxation. New York states that “the amount of the exemption
is equal to the increase in assessed value attributable to”
the renewable energy system. All three phrasings mean virtually
the same thing in practice, and likely correspond to the language
traditionally used in the state’s tax code. Below are several
good examples of each approach.
State Property Tax Exemptions
Illinois
Special Assessment for Solar Energy Systems
This statute allows for a special assessment of solar energy systems
for property tax purposes. Solar equipment is valued at no more
than a conventional energy system. Eligible equipment includes active
and passive systems as well as wind and geothermal systems.
See 35
ILCS 200/10-10.
Indiana
Renewable Energy Systems Exemption
Indiana’s property tax code contains four individually listed
statutes relating to solar, wind, hydro power, and geothermal systems,
respectively. This property tax exemption is allowed every year
that a qualifying system exists on the property. The statutes exempt
from property taxes the entire renewable energy device and affiliated
equipment, including equipment for storage and distribution. Indiana’s
code also explicitly includes renewable energy systems attached
to mobile homes. This is a significant inclusion, as solar power
systems are becoming more and more common on recreational vehicles.
See Indiana
Code § 6-1.1-12-26. .
Minnesota
Wind and Photovoltaic Systems Exemption
This exemption excludes from property taxation the value added
by photovoltaic and certain wind energy systems. This statute applies
to the residential, commercial, and utility sectors. Wind systems
rated less than 2 megawatts (2 MW) are completely exempt –
including support structures – for the life of the system.
Special rules apply to larger systems.
See Minnesota Statutes §
272.02(22) and § 272.02(24); §
272.028.
Oregon
Renewable Energy Systems Exemption
Oregon’s property tax exemption states that the added value
to any property from the installation of a qualifying renewable
energy system will not be included in the assessment of the property’s
value for property tax purposes. Qualifying renewables include solar,
geothermal, wind, water, or methane gas systems for heating, cooling,
or generating electricity. This exemption is intended for end users
and does not apply to property owned by anyone directly or indirectly
involved in the energy industry.
See ORS
§ 307.175.
Other Examples of State Property Tax Exemptions
Montana
-
Renewable Energy Systems Exemption
See MCA
15-6-201(4).
-
Exemption for Renewable Generating Facilities Under 1 MW.
See MCA
15-6-225.
-
Property Tax Reduction for Renewable Generating Facilities
of 1 MW or Greater.
See MCA
15-24-1401(2)(f).
Nevada - Renewable Energy Systems Exemption
See NRS
361.079.
New York - Solar and Wind Energy Systems
Exemption
See NYS Real Property Tax Law Title 2, Sec. 487.
North Carolina - Active Solar Heating
and Cooling Systems Exemption
See NCGS
§ 105-277.
Ohio - Conversion Facilities Property
Tax Exemption
See ORC
Title LVII Taxation § 5709.45 through § 5709.53.
Texas - Solar and Wind-Powered Energy
Systems Exemption
See Texas
Statutes § 11.27.
Wisconsin - Solar and Wind Energy Equipment
Exemption
See Wisconsin
Statutes § 70.111(18).
Local Property Tax Exemptions
Iowa
Local Option Special Assessment of Wind Energy Devices
This statute allows any city or county to assess wind energy conversion
equipment at a special valuation for property tax purposes. Eligible
sectors may include residential, commercial, or industrial. In the
first assessment year, the wind energy conversion equipment is to
be assessed at zero percent (0%) of its cost. For the second through
sixth assessment years, the valuation of the property is to be a
percent of its cost, which increases by five percentage points each
assessment year. For the seventh and succeeding assessment years,
the valuation of the property is to be at 30% of its cost.
See Iowa Code §
427B.26; §
441-21.
Maryland
Local Option - Corporate Property Tax Credit
This statute creates an optional property tax credit for corporations.
It allows counties to provide a credit against the business property
tax for buildings equipped with a solar, geothermal, or qualifying
energy conservation device used to heat or cool a structure. Under
this provision, counties determine the amount of the credit and
are given the freedom to define solar, geothermal, and energy conservation
devices. Counties also determine the length of time that the credit
may be available, up to a maximum of three years. Maryland’s
local option tax incentive is unique because it is applied in the
form of a credit – not an exemption or exclusion as in the
case of most other property tax programs.
See Maryland
Code Tax-Property § 9-203.
New Hampshire
Local Option Property Tax Exemption for Renewable Energy
New Hampshire’s local option property tax statute allows
each city and town to offer an exemption on residential property
taxes in the amount of the assessed value of a renewable energy
system used on the property. Eligible technologies may include solar
(e.g., photovoltaics, solar space heating, solar water heating,
passive solar), wind, and wood-fired central heating systems. Cities
and towns must adopt the exemption provision separately for each
energy source.
See NH
RSA Title V Taxation § 72:61 through § 72:72.
North Dakota
Geothermal, Solar, and Wind Property Exemption
North Dakota exempts from local property taxes any solar, wind,
or geothermal energy device. Qualifying systems can be stand-alone
or part of a conventional system, but in the case where the solar,
wind, or geothermal system is part of a conventional energy system,
only the renewable energy portion of the total system is eligible.
This exemption is applied only during the five-year period following
installation.
See ND
Century Code § 57-02-08(27).
More Examples of Local Property Tax Exemptions
Connecticut - Local Option for Property
Tax
See General
Statutes of Connecticut Ch. 203, Sec. 12-81@56, 57, 62, 63.
Rhode Island – Renewable Energy
Sales Tax Refund
See RI
General Laws § 44-56-1.
South Dakota - Renewable Energy Systems
Exemption
See SD
Codified Laws § 10-6-35.8 through § 10-6-35.20.
Virginia - Local Option Property Tax
Exemption for Solar
See Code
of Virginia § 58.1-3661. |