Grants & Incentives

    Vermont:

    Business Tax Credit for Solar (Corporate)   Note: The Consolidated Appropriations Act, signed in December 2015, included several amendments to this credit which apply to solar technologies and PTC-eligible technologies. Notably, the expiration date for these technologies was extended, with a gradual step down of the credits between 2019 and 2022.  The federal Business Energy Investment Tax Credit (ITC) has been amended a number of times, most recently in December 2015. The table below shows the value of the investment tax credit for each technology by year.  The expiration date for solar technologies and wind is based on when construction begins. For all other technologies, the expiration date is based on when the system is placed in service (fully installed and being used for its intended purpose).

     

    Technology 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Future Years
    PV, Solar Water Heating, Solar Space Heating/Cooling, Solar Process Heat 30% 30% 30% 30% 26% 22% 10% 10%
    Hybrid Solar Lighting, Fuel Cells, Small Wind 30% N/A N/A N/A N/A N/A N/A N/A
    Geothermal Heat Pumps, Microtubines, Combine Heat and Power Systems 10% N/A N/A N/A N/A N/A N/A N/A
    Geothermal Electric 10% 10% 10% 10% 10% 10% 10% 10%
    Large Wind 30% 24% 18% 12% N/A N/A N/A N/A

    Solar Technologies. Eligible solar energy property includes equipment that uses 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, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are not eligible.

    Local Option – Property Tax Exemption 

    Last Updated May 23, 2017

     

    Program Overview

     

    Implementing Sector:
    State
      • Category:
        Financial Incentive
      • State:
        Vermont
      • Incentive Type:
        Property Tax Incentive
      • Eligible Renewable/Other Technologies:
      • Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Photovoltaics, Wind (All), Biomass, Hydroelectric, Combined Heat & Power, Landfill Gas, Wind (Small), Hydroelectric (Small), Anaerobic Digestion, Fuel Cells using Renewable Fuels
        Applicable Sectors:
        Commercial, Industrial, Residential, Agricultural

     

    Summary

    Vermont allows municipalities the option of offering an exemption from the municipal real and personal property taxes for certain renewable energy systems (Note: state property taxes would still apply). Eligible systems include, but are not limited to “windmills, facilities for the collection of solar energy or the conversion of organic matter to methane, net-metered systems … and all component parts there of including land upon which the facility is located, not to exceed one-half acre.” Adoption of this exemption varies by municipality, but the exemption generally applies to the total value of the qualifying renewable energy system and can be applied to residential, commercial, and industrial real and personal property.

    Note: Solar photovoltaic systems under 50 kW that are net-metered or are not connected to the grid and only provide power to the properties on which they are located are already currently exempt from municipal property taxes under 32 V.S.A. § 3802(17) (see Uniform Capacity Tax and Exemption for Solar).\r\n\r\n

    Authorities

      • Date Enacted:
        1975 (subsequently amended)

    Group Net Metering:  Net Metering laws in Vermont were changed to allow a group to invest in a common solar system.  A group of investors or homeowners from one utility can all invest in the installation of a solar system in a central location.  Then each member of the group can harvest the value of the energy that the system produces.  Each agreement must have a manager that oversees distribution of funds and maintains relations with the utility.

    Federal:

    Summary

    Note: The Consolidated Appropriations Act, signed in December 2015, extended the expiration date for PV and solar thermal technologies, and introduced a gradual step down in the credit value for these technologies. The credit for all other technologies expired at the end of 2016.  A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States that is owned and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is at a new home, the “placed in service” date is the date of occupancy by the homeowner. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below Residential Renewable Energy Tax Credit

    Solar-electric property

      • 30% for systems placed in service by 12/31/2019
      • 26% for systems placed in service after 12/31/2019 and before 01/01/2021
      • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
      • There is no maximum credit for systems placed in service after 2008.
      • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021.
      • The home served by the system does not have to be the taxpayer’s principal residence.

    Residential Renewable Energy Tax Credit

    Solar-electric property

      • There is no maximum credit for systems placed in service after 2008. The maximum credit is $2,000 for systems placed in service before January 1, 2009.
      • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2016.
      • The home served by the system does not have to be the taxpayer’s principal residence.
      • Note that the Solar Energy Industries Association (SEIA) has published a three-page document that provides answers to frequently asked questions regarding the federal tax credits for solar energy.

    Solar water-heating property

      • There is no maximum credit for systems placed in service after 2008.
      • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2016.
      • Equipment must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.
      • At least half the energy used to heat the dwelling’s water must be from solar in order for the solar water-heating property expenditures to be eligible.
      • The tax credit does not apply to solar water-heating property for swimming pools or hot tubs.
      • The home served by the system does not have to be the taxpayer’s principal residence.

     

    Business Energy Investment Tax Credit (ITC)  Note: The Consolidated Appropriations Act, signed in December 2015, included several amendments to this credit which apply to solar technologies and PTC-eligible technologies. Notably, the expiration date for these technologies was extended, with a gradual step down of the credits between 2019 and 2022. The federal Business Energy Investment Tax Credit (ITC) has been amended a number of times, most recently in December 2015. The table below shows the value of the investment tax credit for each technology by year.  The expiration date for solar technologies and wind is based on when construction begins. For all other technologies, the expiration date is based on when the system is placed in service (fully installed and being used for its intended purpose).

    Technology 12/31/16 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Future Years
    PV, Solar Water Heating, Solar Space Heating/Cooling, Solar Process Heat 30% 30% 30% 30% 26% 22% 10% 10%
    Hybrid Solar Lighting, Fuel Cells, Small Wind 30% N/A N/A N/A N/A N/A N/A N/A
    Geothermal Heat Pumps, Microtubines, Combine Heat and Power Systems 10% N/A N/A N/A N/A N/A N/A N/A
    Geothermal Electric 10% 10% 10% 10% 10% 10% 10% 10%
    Large Wind 30% 24% 18% 12% N/A N/A N/A N/A

    Solar Technologies. Eligible solar energy property includes equipment that uses 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, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible. Passive solar systems and solar pool-heating systems are not eligible.

    Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation (2008-2012) Note: The Consolidated Appropriations Act, signed in December 2015, extended the “placed in service” deadline for bonus depreciation. Equipment placed in service before January 1, 2018 can qualify for 50% bonus depreciation. Equipment placed in service during 2018 can qualify for 40% bonus depreciation. And equipment placed in service during 2019 can qualify for 30% bonus depreciation.  Under the federal Modified Accelerated Cost-Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property (26 USC § 168(e)(3)(B)(vi)) under the MACRS, which refers to 26 USC § 48(a)(3)(A), often known as the energy investment tax credit or ITC to define eligible property. Such property currently includes*:

      • a variety of solar-electric and solar-thermal technologies
      • fuel cells and microturbines
      • geothermal electric
      • direct-use geothermal and geothermal heat pumps
      • small wind (100 kW or less)
      • combined heat and power (CHP)
      • the provision which defines ITC technologies as eligible also adds the general term “wind” as an eligible technology, extending the five-year schedule to large wind facilities as well.

    In addition, for certain other types of renewable energy property, such as biomass or marine and hydrokinetic property, the MACRS property class life is seven years. Eligible biomass property generally includes assets used in the conversion of biomass to heat or to a solid, liquid or gaseous fuel, and to equipment and structures used to receive, handle, collect and process biomass in a waterwall, combustion system, or refuse-derived fuel system to create hot water, gas, steam and electricity. Marine and hydrokinetic property includes facilities that utilize waves, tides, currents, free-flowing water, or differentials in ocean temperature to generate energy. It does not include traditional hydropower that uses dams, diversionary structures, or impoundments.  The 5-year schedule for most types of solar, geothermal, and wind property has been in place since 1986. The federal Energy Policy Act of 2005 (EPAct 2005) classified fuel cells, microturbines and solar hybrid lighting technologies as five-year property as well by adding them to § 48(a)(3)(A). This section was further expanded in October 2008 by the addition of geothermal heat pumps, combined heat and power, and small wind under The Energy Improvement and Extension Act of 2008.

    Bonus Depreciation  The federal Economic Stimulus Act of 2008, enacted in February 2008, included a 50% first-year bonus depreciation (26 USC § 168(k)) provision for eligible renewable-energy systems acquired and placed in service in 2008. The allowance for bonus depreciation has since been extended and modified several times since the original enactment, most recently in December 2015 by the Consolidated Appropriations Act Of 2015 . Equipment placed in service before January 1, 2018 can qualify for 50% bonus depreciation. Equipment placed in service during 2018 can qualify for 40% bonus depreciation. And equipment placed in service during 2019 can qualify for 30% bonus depreciation.

    USDA – Rural Energy for America Program (REAP) Loan Guarantees   These incentives are available to agricultural producers and rural small businesses to purchase renewable energy systems (including systems that may be used to produce and sell electricity) and to make energy efficiency improvements. Funding is also available to conduct relevant feasibility studies, with approximately 2% of total funding being available for feasibility studies. Eligible renewable energy projects include wind, solar, biomass and geothermal; and hydrogen derived from biomass or water using wind, solar or geothermal energy sources. These grants are limited to 25% of a proposed project’s cost, and a loan guarantee may not exceed $25 million.