Editor's note: Read this if you are a current or future owner of solar or other renewable energy equipment, or a solar investor, developer, or installer.
Maine LD 1430: An opportunity for businesses with solar energy systems
In 2019, Maine passed bill LD 1430, which introduces a solar tax exemption for both business and residential owners enabling renewable energy adopters to save money―while adding real value to their property and assets. As our experience in Massachusetts has shown, eligible businesses should take advantage of these types of laws, as you can reduce your property tax assessment by the value of your solar or wind energy equipment.
Let’s look at a simple example assuming a $20 mill rate and a business owner who owns land and installs a large commercial solar energy system on it to meet the electrical demand of his business:
Land |
50,000 |
Solar Equipment |
200,000 |
LD 1430 Property Tax Exemption for solar equipment |
(200,000) |
Net Property valuation |
50,000 |
Property Tax |
1,000 |
Property Tax without LD 1430 |
5,000 |
Annual Savings |
4,000 |
Standardized valuation methodology provides clear guidance for taxpayers
In December, the Maine Revenue Service expanded on the bill by providing standardized solar valuation methodology. It provides much-needed guidance to municipalities on how to assess property tax on solar equipment, helps prevent over taxation of businesses, and streamlines the process for applying for the solar property tax exemption.
Solar tax exempt laws in other states
Maine was not the first state to enact this type of legislation to help improve renewable energy adoption in the commercial space, nor will it be the last. Massachusetts, among others, has a similar law on the books, which allows for an exemption on solar or wind equipment used to supply the energy needs of a taxable property. Over the past few years, many of our clients in Massachusetts have taken advantage of the exemption, and have saved thousands of dollars doing so.
Not surprisingly, Massachusetts has seen strong growth in renewable energy in the commercial sector. According to the Massachusetts Clean Energy Center, Massachusetts went from a few hundred solar energy systems in 2006 to nearly 100,000 in 2018. Other states have also enacted this type of legislation. In fact, all but 12 states have enacted some form of solar tax exemption laws.
Looking ahead
This law and others like it will continue to help renewable energy projects get off the ground. As the number of solar projects increases, so too does the ability to create more opportunity.
We’ve been working with Massachusetts providers for many years, helping our clients grow as the market has been maturing. For more information on how we can help you in Maine (or other states) take advantage of these exemptions, please contact the renewable energy team.
The Maine Revenue Service is planning to release a standard application for the property tax exemption in the coming weeks. Please stay tuned for updates.