Local Option - Property Tax Exemption for Renewable Energy Facilities

Summary

The State of Alabama provides abatement of property tax for qualifying renewable energy facilities in the state. Only the noneducational portion of the property tax can be abated. 

Eligibility:

The Renewable Energy Facility is defined as any plant, property, or property that either produces electricity from biofuels, or from renewable energy resources, including wind, biomass, black liquor, tidal or ocean current, geothermal, solar energy, small irrigation, municipal solid waste, and hydrogen when derived or produced from some other renewable energy resource. Hydropower is exempted from the definition of an eligible resource. 

Program Description:

The abatement of the property taxes is based on the market value of specific assets; therefore, the actual amount of taxes abated is determined each year as the property is assessed and valued.  Although the Department of Revenue oversees the administration of property taxes, the county tax assessors and collectors are responsible for assessing the property and collecting the property tax.  

The local governing body i.e.- municipality, county, or a public industrial authority- may grant property tax abatement of all the states and local taxes for a period of 10 years, however, it can be extended for another period of 10 years (maximum of total 20 years) through additional approval by the appropriate granting authority i.e. county tax abated only with consent by resolution of the governing body of the county; municipal tax abated only with consent by resolution of the governing body of the municipality; and State tax abated only with the consent of the Governor. The abatement granted can be incorporated under one agreement. The property tax abatement must be granted prior to placing the facility in service, no additional property tax may be eligible for abatement once the project is placed in service.

Interested applicants for the property tax abatement may apply to the governing body of the municipality, county, or public industrial authority depending on where the facility is situated. The government authority will perform a cost/benefit analysis of the proposed development to determine the maximum exemption period for the abatement of the property tax.