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| Home > Policy Issues > Renewable Energy Incentives > Bill Text > Business Tax Credits and Deductions |
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Business Tax Credits and DeductionsRenewable Energy Investment CreditsHawaiiSolar and Wind Energy CreditEffective 7/1/03-1/1/08, the Hawaii Energy Tax Credits allow individuals or corporations to claim an income tax credit of 20% of the cost of equipment and installation of a wind system and 35% of the cost of equipment and installation of a solar thermal or photovoltaic system. In 2003, the tax credits were revised and extended to the end of 2007. The revised credits apply to renewable energy technology systems installed and placed in service after June 30, 2003, and now include a cap of $250,000 on the amount of credit allowed for commercial property. See HRS § 235-12(b)(1) and § 235-12(b)(4). MontanaAlternative Energy Investment Corporate Tax CreditAvailable to taxpayers purchasing an existing facility and to those building a new facility, commercial and net metering alternative energy investments of $5,000 or more are eligible for up to 35% tax credit against individual or corporate tax on income generated by the investment. The credit may only be taken against net income produced by the eligible equipment or by associated new business activity. Associated facilities, manufacturing plants producing the alternative energy equipment, and industries using the energy generated may use the tax credit. The tax credit must be taken the year the equipment is placed in service and may be carried over for the next 7 years. Alternative energy systems include solar, wind, geothermal, conversion of biomass, fuel cells that do not require hydrocarbon fuel, small hydroelectric generators, or methane from solid waste. Taxpayers may not take this credit in conjunction with any other state energy or state investment tax benefits, or with the property tax exemption for non-fossil energy property. See MCA 15-6-201(4) and MCA 15-32-401. Corporate Property Tax Reduction for New or Expanded Generating FacilitiesBusinesses engaged in the production of energy by means of an alternative renewable energy source are eligible for a tax credit against corporate income tax. To be considered an expanding industry, total full-time jobs must increase by 30% or more. The credit is equal to 1% of new wages paid in-state during the first three years of operation. No carryback or carryover is allowed for this credit. See MCA 15-31-124. TexasSolar Energy Device Franchise Tax DeductionThis statute allows a corporation to deduct the cost of a solar energy device in one of two ways:
Both taxable capital and a company’s income are taxed under the franchise tax. Other Examples of Renewable Energy Investment CreditsCalifornia - Solar or Wind Energy System
Credit - Corporate North Dakota - Geothermal, Solar, and
Wind Corporate Credit Ohio - Conversion Facilities Corporate
Tax Exemption Oregon - Renewable Energy Resource
Facility Tax Credit Utah - Renewable Energy Systems Tax
Credit - Corporate Washington - High Technology Product
Manufacturers Excise Tax Exemption Business Production Tax CreditsMinnesotaRenewable Energy Production IncentiveMinnesota’s program is unique in its offering of payments
for actual energy output. There is an advantage in programs that
offer credits or payments based on production rather than for investment:
production payments and credits place a premium on project output
and hence quality, not just rated capacity, which may or may not
be fully utilized once installed. This program and Minnesota’s other programs promoting wind generation were created to help Xcel Energy (formerly Northern States Power), the state’s largest electricity generator, meet the Minnesota legislature’s mandate that NSP build or purchase 425 MW of wind power by 2002 and an additional 400 MW by 2012. Through its other wind energy incentives Minnesota has had success in developing large, centralized wind electricity generation projects through the benefit of existing incentives. See Minnesota Statutes 2003 § 216C.41 New MexicoRenewable Energy Production Tax CreditEnacted 3/4/02 and amended in 2003, New Mexico offers a tax credit against corporate income tax of one cent per kilowatt-hour for companies that generate electricity from wind, solar, or biomass. The credit is applicable only to the first 400,000 megawatt-hours of electricity in each of 10 consecutive years. To qualify, an energy generator must use a zero-emissions generation technology and have capacity of at least 10 megawatts. Energy generators must not exceed two million megawatt-hours of production annually. If the amount of the tax credit claimed exceeds the taxpayer’s corporate income tax liability, the excess may be carried forward for up to five consecutive taxable years. See New Mexico Statutes Annotated 1978 § 7-2A-19; 2003 HB 146. OklahomaZero-Emissions Facility Production Tax CreditAn income tax credit is available to producers of electric power using renewable energy resources from a zero-emissions facility located in Oklahoma. The zero-emissions facility must have a rated production capacity of fifty megawatts (50 MW) or greater. Renewable energy resources include wind, moving water, sun, and geothermal energy. The construction and operation of the zero-emissions facility must result in no pollution or emissions that are or may be harmful to the environment, as determined by the Department of Environmental Quality. The amount of the credit varies depending on when the electricity is generated. Credits may be claimed over a 10-year period and non-taxable entities may transfer the tax credit to taxable entities. See OS § 68.2357.32A; 2001 SB 440. |
| This page was last updated on August 4, 2004. |