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

• 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.