Latest News on 30% ITC or Grant for Wind or Solar
30% Federal Tax CREDIT FAQ's
Amount of Incentives
What is the amount of the business and residential credits?
Thirty percent of the total installed cost of the system.
Can a system owner use the credit in addition to a state credit or rebate, federal grant, or other government incentive? If so, how does this work?
Pursuant to AREA, for periods after December 31, 2008, a system owner can use either credit in addition to a state credit or rebate, federal grant, or other government incentive. Under prior law, in determining the amount of credit allowable with respect to certain government-subsidized projects, the taxpayer was required to reduce the cost of the project to reflect the government subsidy.
Can a system owner use the credit against the Alternative Minimum Tax? The credit can offset the tentative minimum tax of the taxpayer.
If a system owner cannot use all of the credit in a single tax year, can the remainder be carried over to (a) following year(s)?
If a system owner cannot use the entire amount of the residential credit in a taxable year because of insufficient tax liability in such year, the unused amount of the credit may be carried forward to and used in a succeeding taxable year (subject to similar limitations in such succeeding year.) The business small wind credit is part of the general business credit and may be carried forward 20 years.
Owner and Equipment Eligibility
What equipment qualifies for the credits? Is there any specific equipment that does not qualify?
In the case of the business credit the definition of qualified property is property that uses a wind turbine with a nameplate capacity of not more than 100 kilowatts to generate electricity. The property must be constructed or erected by, or the original use of the property must begin with, the taxpayer. The property must be of a character for which depreciation is allowed, must be used in the United States, and generally cannot be owned or used by a government agency, foreign person or other tax-exempt person. The Secretary of the Treasury, in consultation with the Secretary of Energy, may prescribe performance and quality standards for qualified property. Such regulations will be applied prospectively. In the case of the residential credit, the definition of qualified property is property that uses a wind turbine to generate electricity for use in connection with a dwelling unit located in the United States and used as a residence by the taxpayer. Expenditures that are allocable to a swimming pool, hot tub, or any other energy storage medium that has a function other than storage does not qualify for the credit. In general, the original use of the property must begin with the taxpayer.
Can the credits be applied to used or refurbished equipment? In general, the property must be new. Tax rules that determine when refurbished equipment is treated as new property are complicated and beyond the scope of this document. A consumer should consult a tax advisor with respect to this and any other issue involving the credit.
How is "business use" defined? In the case of the "business" credit, the property must be of a character for which depreciation is allowed. This generally means that the property is used in a trade or business or held for the production of income.
Can utilities use the business credit? For-profit utilities are eligible for the business credit. Municipal power systems are not eligible.