30% Business Tax Credit for Solar

Summary

This incentive is no longer available; this is for informational purposes only.

The Business Solar Tax Credit awarded $7,500,000 in tax credits to solar projects in Vermont. The CEDF accepted applications through the end of 2010 and it published a final list in January 2011 (including those on the wait list, if additional funding were to become available). Legislation passed in May 2011 also authorized business with a solar tax credit allocation to select a grant in lieu of the tax credit. 

Vermont offered the "Business Solar Tax Credit" for installations of solar energy equipment on business properties. The credit was created in March 2008 by S.B. 209, and amended several times since.* The credit was equal to 100% of the "Vermont-property portion" of the federal business energy tax credit for solar from 2008 through 2011. In effect, this constitutes a 30% state-level credit for systems and equipment that use solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Hybrid solar lighting systems are those that use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight. The credit is generally not available for public utility property, passive solar systems or pool heating equipment. Any unused tax credit may be carried forward for no more than five years.

For projects starting January 1, 2010 or later, businesses had to seek tax credit eligibility pre-approval from the Clean Energy Development Board (application period closed). Through July 15, 2010 solar energy facilities 2.2 MW or less were eligible. As of August 2010, only projects 150 kW or less were eligible. Businesses had until December 15, 2010 to apply to the board to certify eligibility and they had until December 31, 2010 to make the investment. Construction for these projects must begin by September 1, 2011.

Any taxpayer who received funding from Vermont's Clean Energy Development Fund was not eligible to claim the tax credit for the project (for investments made on or after January 1, 2009). The tax credit will only apply to costs not covered by other grants or funding from other sources. If the Federal Grant in lieu of tax credit (1603) was taken, Vermont's business solar tax credit was not available. If taxpayers were not awarded a Solar Tax Credit, they may be eligible for the business investment tax credit.

The Vermont Department of Taxes issued Technical Bulletin 45 (July 2009, updated July 2010) with additional guidance, including information about which forms to complete for individual and corporate filers. Corporate filers should use tax for BA-404 available on Vermont Department of Taxes website.

H.B. 56 (Act 47 of May 2011) made a significant change to the Business Solar Tax Credit. Businesses with an allocation were able to select a grant in lieu of the tax credit. The grant amount was either 50% the value of the tax credit allocation or 15% of the actual costs of the plant --whichever is less. The Clean Energy Development Fund contacted businesses with solar tax credit allocations in order to offer them the application for these grants -- the deadline for making this selection was August 1, 2011. It should be noted that H.B. 56 also specifies that this grant is not taxable under Vermont's income tax laws.


*H.B. 446 and H.B. 313 in May 2009, H.B. 781 in June 2010, and H.B. 56 in May 2011 amended the tax credit.