Property Tax Exemption for Renewable Energy Generation Facilities

Summary

Note: In 2024, the Nebraska legislature passed L.B. 1317, which means that land underlying renewable energy facilities is no longer classified as agricultural. The Nebraska Department of Revenue issued Directive 24-3, which states that land underlying renewable energy facilities should be classified as undeveloped commercial land.

Personal Property

In 2010 Nebraska created a nameplate capacity tax that replaced the Nebraska Department of Revenue's central assessment and taxation of depreciable tangible personal property associated with wind energy generation facilities (see L.B. 1048). In 2015, eligibility was extended to solar, biomass, and landfill gas (see L.B. 424).

The nameplate capacity tax is $3,518 per installed megawatt (MW). On March 1 of each year, the owner of a renewable generation facility must file with the Department of Revenue a report on the nameplate capacity of the facility for the previous calendar year. Nameplate capacity taxes for any calendar year are due on April 1 of the following year. The Department of Revenue pays all proceeds related to the tax to the county treasurer of the county where the wind energy generation facility is located.

Eligibility

Any depreciable tangible personal property used directly in the generation of electricity using wind, solar, biomass, or landfill gas as the fuel source and has a nameplate capacity of 100 kilowatts (kW) or more is exempt from the property tax levied on depreciable tangible personal property. Depreciable tangible personal property includes, but is not limited to, wind turbines, rotors and blades, solar panels, towers, trackers, generating equipment, transmission components, substations, supporting structures or racks, inverters, and other system components such as wiring, control systems, switchgears, and generator step-up transformers.

Exemptions

Renewable energy facilities are exempt from both the nameplate capacity tax and the real property tax assessment if they are owned by the federal government; the State of Nebraska; a public power district; a public power and irrigation district; a municipality; a registered group of municipalities; an electric membership association; a cooperative; or an electricity customer-generator, which is someone who installs an eligible renewable energy system with a capacity of 25 kW or less on his or her side of the meter, interconnects to the grid, and uses the electricity generated by the renewable energy system to offset his or her requirements for electricity at the location of the system.

Real Property

The real property of the facility is subject to local assessment. While supporting structures to wind turbines are exempted, real property upon which wind generation facilities are based will not be exempt from property taxes. Real property associated with wind energy generation includes, but is not limited to, concrete pads, foundations, operations and maintenance buildings, road construction, leasehold value, and lease payments, and it is assessed at 100% of actual value.

Renewable Energy

Directive 16-1 superseded Directive 11-3, stating that the tangible personal property used directly in the generation of electricity using solar, biomass, or landfill gas is exempt from property tax if the depreciable tangible personal property was installed on or after January 1, 2016, and has a nameplate capacity of 100 kilowatts or more. Directive 23-3 now supersedes Directive 16-1.