Solar Tax Credits
Montana resident individuals may claim an income tax credit of up to $500 for installing a recognized nonfossil form of energy generation or heating, including low-emission wood or biomass combustion devices, in their principal residence. If necessary, the credit may be carried over for up to four years after the first year it is claimed. More...
Certain amounts ($20,000 for a single-family residential dwelling or $100,000 for all other structures) of the assessed value of non-fossil forms of energy generation equipment or low-emission wood or biomass combustors are exempt from property taxes for 10 years following installation.
The Alternative Energy Revolving Loan Program (AERLP) was established by the 57th Montana Legislature in Senate Bill 506 and amended in 2005. Its purpose is to provide a financing option to Montana homeowners, small businesses, non-profits and government entities to install alternative energy systems that generate energy for their own use. Loans can be made up to a maximum of $40,000 (subject to available funds), and may be repaid in up to ten years, depending on the loan amount. Interest rates are set annually and are fixed for the term of the loan. The interest rate for 2008 is 5 percent.
The federal Renewable Energy Production Incentive (REPI) provides incentive payments for electricity produced and sold by new qualifying renewable energy facilities. Qualifying systems are eligible for annual incentive payments of 1.5¢ per kilowatt-hour (in 1993 dollars and indexed for inflation) for the first 10-year period of their operation, subject to the availability of annual appropriations in each federal fiscal year of operation.
REPI was originally authorized under Section 1212 of the Energy Policy Act of 1992 and was amended in 2005 with Section 202 of the Energy Policy Act of 2005 (H.R. 6). Section 202 reauthorized appropriations for fiscal years 2006 through 2026 and expanded the list of eligible technologies and facilities owners. The regulations for the administration of the REPI program are contained in Title 10 of the Code of Federal Regulations, Part 451 (10 CFR 451).
Eligible electric production facilities include not-for-profit electrical cooperatives, public utilities, state governments, Commonwealths, territories, possessions of the United States, the District of Columbia, Indian tribal governments, or a political subdivision thereof and Native Corporations. The production payment applies only to the electricity sold to another entity. Qualifying systems must generate electricity using solar, wind, geothermal (with certain restrictions), biomass,* landfill gas, livestock methane, or ocean (including tidal, wave, current, and thermal) generation technologies. Fuel cells using hydrogen derived from eligible biomass facilities are also eligible.
Commercial, industrial, and utility entities are eligible for a corporate tax credit for solar and other renewable energy systems. The credit equals 30% for solar.
The tax section of the American Recovery and Reinvestment Act of 2009 provides a three-year extension of the production tax credit (PTC) for most renewable energy facilities, while offering expansions on and alternatives for tax credits on renewable energy systems. The PTC provides a credit for every kilowatt-hour produced at new qualified facilities during the first 10 years of operation, provided the facilities are placed in service before the tax credit's expiration date. For 2008, biomass facilities fueled with dedicated energy crops ("closed-loop biomass"), as well as wind, solar, and geothermal energy facilities earned 2.1 cents per kilowatt-hour, while other qualified facilities earned 1 cent per kilowatt-hour.
Homes and businesses also will benefit under the American Recovery and Reinvestment Act of 2009 provides greater tax credits for clean energy projects at homes and businesses and for the manufacturers of clean energy technologies. For homeowners, the act increases a 10% tax credit for energy efficiency improvements to a 30% tax credit, eliminates caps for specific improvements (such as windows and furnaces), and instead establishes an aggregate cap of $1,500 for all improvements placed in service in 2009 and 2010 (except biomass systems, which must be placed in service after the act is enacted). The act also tightens the energy efficiency requirements to meet current standards. For residential renewable energy systems, the act removes all caps on the tax credits, which equal 30% of the cost of qualified solar energy systems, geothermal heat pumps, small wind turbines, and fuel cell systems. The act also eliminates a reduction in credits for installations with subsidized financing.
For more information on tax incentives, see:
- Database of State Incentives for Renewables and Efficiency (DSIRE). Includes both state and federal incentives.