Grants and Incentives for PV Systems Located in Wisconsin
Federal 10% (Business Investment) Tax
Credit for Solar Energy Equipment
To support the commercialization of PV systems the federal government
offers a 10% tax credit to taxpaying commercial entities that purchase and install
a PV system in the tax year. The tax credit is not available to public
utilities, governmental organizations and non-profit organizations. The
requirements of the tax credit, stipulations and limitations are summarized
in the following text.
Requirements
- Used by taxpaying non-governmental organization. Not available to residential customers.
- Equipment must use solar energy to generate electricity to heat or cool or provide hot water to a structure or to provide process heat.
- The equipment must be constructed, reconstructed or erected by the taxpayer.
- The equipment must be installed and operational in the year in which depreciation is first taken on the equipment.
- Cannot include any equipment that is public utility property.
- The equipment must meet performance and quality standards, if any, that have been prescribed by regulations and are in effect at the time the equipment is acquired.
Stipulations
- Qualifying costs include the following:
- Equipment that uses solar energy to generate electricity
- Storage devices
- Power conditioning equipment
- Transfer equipment and related parts
- Other equipment up to, but not including, the stage that transmits or uses electricity
- Some dual-use equipment. Dual-use equipment uses both solar and non-solar energy, such as tanks and hot water pipes. Dual-use equipment only qualifies if the use of energy from a non-solar source does not exceed 25%.
- If the project was partially financed by subsidized financing or tax-exempt private activity bonds, then only that share which was not financed by subsidized means is eligible for the 10% deduction. Subsidized energy financing means financing provided under a federal, state or local program, a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy.
- The investment credit must be recalculated if:
- The property is disposed of before the end of 5 years after the property was placed into service (the recapture period).
- The use of the property is changed so that it no longer qualifies for the credit.
- The business use of the property changes so that it no longer qualifies (in whole or in part) as investment credit property.
Limitations
- If the project was fully financed by subsidized financing or tax-exempt private activity bonds, then no tax credit may be taken.
- The maximum annual tax credit is $25,000, plus 25% of the total remaining tax credit. Tax credits above that amount can be taken in later years. (For example, if a system costs $350,000, then it would be eligible for a total of $35,000 in tax credits, $27,500 of which could be taken in the first year.)
- The tax credit cannot be greater than the taxpayers total tax liability.
FURTHER INFORMATION:
http://www.dsireusa.org and click on Federal Incentives
http://www.mdv-seia.org/federal_incentives.htm
Use Form 3468 to claim the investment credit.
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