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Solar Energy Property Tax Changes

The Legislature made some important changes to solar property tax law in an effort to create more consistency while maintaining incentives. The State Education Fund now exempts systems 50kW and under from state tax (up from 10kW) and removes the sunset provision in 2023 that would have caused the 50kW exemption to automatically expire. Systems over 50kW will continue to be taxed at a rate of $4/kW.

A new methodology for municipal taxation averages the value of a system over 25 years, with $0 value after that period. The first 50kW (AC) of net-metered systems will be exempt from all municipal taxes.Preexisting municipal agreements will not be affected. All projects retain the option to enter into agreements or seek exemptions for systems (utilizing either Title 24 and 32) and can now use this methodology as a ceiling to seek agreements. Title 32's inclusion of a acre criteria for exemption, a barrier for towns seeking to exempt solar projects, was removed.