Tax Credit for Solar Energy Systems on Residential Property (Corporate)

Summary

 NOTE: This credit has expired. Prior to its expiration, by March 2016 all $25 million of credits were granted to taxpayers, meeting the entire budget cap for the life of the credit. Qualifying taxpayers who were unable to claim the credit due to the cap, and who installed their systems on or before December 31, 2015, were given an opportunity to the claim the credit through H.B. 187 of 2017.  

Louisiana provides a tax credit for solar photovoltaic (PV) systems purchased and installed on or after January 1, 2008 and before January 1, 2018. The credit may be applied to personal, corporate or franchise taxes, depending on the entity which purchases and installs the system, but the system must be installed at a single-family residence to be eligible (systems installed at residential rental apartments were made ineligible by HB 705 of 2013). Only one credit may be taken per system, so if the property is sold, the taxpayer who originally claimed the credit must disclose this, as the new owner will not be eligible for another tax credit on the same system. Each residence is limited to just one credit. A second system installed at the same residence is ineligible for a credit. The tax credit can be applied only for solar photovoltaic (PV) systems. Effective June 19 2015, solar-thermal systems are ineligible for the tax credit. 

Customer Owned Systems

For systems purchased between January 1, 2014 and July 1, 2015, the credit is equal to 50% of the first $25,000 of the cost of each system, including installation costs. Any systems purchased or installed after July 1, 2015 and before January 1, 2018 will equal to the less of either $2 per watt (DC), 50% of the cost of purchase and installation, or $10,000. 

The credit must be fully claimed in the taxable year in which the system is installed and placed in service. Equipment added at a later date cannot utilize any existing system components in order to qualify for the tax credit. Any excess credit which exceeds the taxpayer's liabilities for that year shall be treated as an overpayment, and the DOR will issue a refund for the remaining amount within one year of receiving the claim.

For photovoltaic (PV) systems, the tax credit applies to AC or DC generation systems which are grid-connected, net-metered systems (with or without battery backup) and stand-alone systems. Electrical equipment must be tested and certified by a Federal Occupational Safety and Health Administration (OSHA) nationally recognized testing laboratory and installed in compliance with all applicable building and electrical codes. 

This tax credit may be combined with any federal tax incentive, but it may not be combined with any other state tax incentive. Whenever additional incentives such as cash rebates, prizes or gift certificates are offered in addition to the tax credit, the eligible cost must be reduced by the value of the additional incentive received.

Leased Systems

Systems leased by a third party and used at a residence can qualify for a tax credit, but there are additional provisions in the law that apply to these systems. For leased systems that are installed before January 1, 2014, the value of the credit will be reduced to 38% of the first $25,000 of the cost of each system. Systems installed after January 1, 2014 and before January 1, 2018, will receive credit of $38% of the first $20,000 of the cost of the system. 

Additionally, leased systems can be no larger than 6 kilowatts (kW). The law also sets maximum system costs for leased systems. A leased system can claim system costs that do not exceed these limits depending on the year it is placed in service:

• Placed in service between 7/1/13 - 6/30/14: $4.50 per watt with $12,500 limit
• Placed in service between 7/1/14 - 6/30/15: $3.50 per watt with $9,500 limit
• Placed in service between 7/1/15 - 12/31/17: $2.00 per watt with $4,560 limit

HB 779 (Act 131) passed in 2015 adds a $10 million annual cap for available credit for each FY 2016 and FY 2017. For FY 2018, the cap is reduced to $5 million. Credits will be granted on a first-come, first-served basis. Any amount that exceeds the available tax credits in fiscal year will be treated as applied for the credit for on the first day of the subsequent year.