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SPONSOR: |
Feldman |
DATE TYPED: |
|
HB |
|
||
SHORT TITLE: |
Solar or Wind Energy Tax Credit |
SB |
348 |
||||
|
ANALYST: |
Neel |
|||||
REVENUE
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
FY03 |
FY04 |
|
|
|
|
($1,800.0) |
($1,800.0) |
Recurring |
General
Fund |
|
|
|
|
|
(Parenthesis ( ) Indicate Revenue Decreases)
LFC files
Responses
Received From
Energy, Minerals and
Natural Resources Department
No Response
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis
of Bill
Senate
Bill 348 enacts a new section of the Income Tax Act and provides for a solar or
wind energy tax credit, allowing taxpayers to claim 15% of the installed cost
of a solar or wind energy system, not to exceed $3,000. Personal and corporate tax credits are
included. A duration
of ten years is established for purchase and installation of solar or wind energy
systems that are eligible for tax credits: July 2003 through June 2013. Taxpayers may claim credit against their
state income tax liability for the taxable year in which the system is
installed, followed by five consecutive years during which unused credit may be
claimed.
A
solar or wind energy system is defined as a system that produces electricity or
heat from the sun and includes only the following system types: 1) photovoltaic
(PV), 2) wind, 3) solar domestic hot water, and 4) active solar space
heating. Solar or wind energy systems
providing electricity or heat to the end uses of swimming pools, saunas, and
hot tubs are not eligible for a tax credit.
The total installed costs eligible for claiming tax credits are
purchase, installation, and warranty costs.
The system must have a minimum warranty of one year from date of completion
of the system installation. The cost of
an extended warranty may be included as an installed cost.
FISCAL IMPLICATIONS
EMNRD makes the
following assumptions regarding the potential fiscal impact:
The estimated annual
revenue reduction would be $1,800.0.
OTHER SUBSTANTIVE ISSUES
The
combination of the 15% credit allowance and the cap of $3,000 will enable
taxpayers to fully utilize the tax credit for a system installation cost of
$20,000. Up to $20,000, a prorated portion
of the $3,000 cap could be claimed.
Virtually all conventional solar domestic hot water and active solar
space heating systems and many PV and wind energy systems can be installed at a
residence for this amount, or less. Some
PV and wind energy systems may have an installed cost greater than
$20,000. Any
additional cost greater than $20,000 would be borne completely by the taxpayer.
Low-income
and middle-income taxpayers may not be able to effectively utilize tax credits
to install solar and wind energy systems due to their low state income tax
liability. Example: a taxpayer who has
an average annual liability of $100 for state income taxes would only be
eligible for a $600 tax credit.
Solar
or wind energy tax credits are not available to federal, state, local, and
tribal governments, as well as public schools, because they do not incur any
income tax liability; other incentives are therefore required to promote the
use of renewable energy for these entities.
SN/prr