Solar and Wind Energy Device Franchise Tax Deduction

September 11, 2022

Summary

Texas allows a corporation to deduct the cost of a solar energy device from the franchise tax in one of two ways:

The total cost of the system may be deducted from the company's taxable capital or,
10% of the system's cost may be deducted from the company's income.

Both taxable capital and a company's income are taxed under the franchise tax, which is Texas's equivalent to a corporate tax.

For the purposes of this deduction, a solar energy device means "a system or series of mechanisms designed primarily to provide heating or cooling or to produce electrical or mechanical power by collecting and transferring solar-generated energy. The term includes a mechanical or chemical device that has the ability to store solar-generated energy for use in heating or cooling or in the production of power." Under this definition wind energy is also included as an eligible technology.

Texas also offers a franchise tax exemption for manufacturers, seller, or installers of solar energy systems which also includes wind energy as an eligible technology.

Program Overview

Implementing Sector:	State
Category:	Financial Incentive
State:	Texas
Incentive Type:	Corporate Tax Deduction
Web Site:	http://www.seco.cpa.state.tx.us/re/incentives-taxcode-statutes.php
Administrator:	Comptroller of Public Accounts
Start Date:	1982
Eligible Renewable/Other Technologies:	Solar Water Heat Solar Space Heat Solar Thermal Electric Solar Thermal Process Heat Solar Photovoltaics Wind (All)
Incentive Amount:	10% of amortized cost

Authorities

Name:	Texas Tax Code § 171.107
Date Enacted:	1981 (subsequently amended)
Effective Date:	1982

Contact

Name:	Comptroller of Public Accounts
Organization:	Comptroller of Public Accounts
Address:	Post Office Box 13528, Capitol Station Austin TX 78711-3528
Phone:	(800) 252-1381

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.