Last Updated September 27, 2018
Personal Tax Credit
State Energy Program, State Tax Commission
01/01/01, amendments effective 01/01/07
Residential Credit: 12/31/2021
Residential, Commercial, Commercial, Commercial
Eligible Renewable/Other Technologies:
Solar - Passive, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Solar Photovoltaics, Biomass, Hydroelectric, Geothermal Heat Pumps, Solar Pool Heating, Wind (Small), Geothermal Direct-Use, Geothermal Electric, Wind (All), Biomass, Hydroelectric, Geothermal Heat Pumps, Landfill Gas, Geothermal Direct-Use, Geothermal Electric, Solar Photovoltaics, Wind (All), Biomass, Solar Photovoltaics
Utah's income tax credit for renewable energy systems includes provisions for both residential and commercial applications. The Utah Office of Energy Development administers the tax credit and has responsibility for revising the tax credit rules and certifying systems as eligible for the credit. Legislation enacted in 2007 extended these tax credits through at least 2012. On or before this time, and every five years thereafter, the Utah Tax Review Commission must review the tax credit and make recommendations as to whether the tax credit should be continued, modified, or repealed. This legislation also expanded the tax credit language to include geothermal resources, and modified the credit calculation for large wind, biomass, and geothermal electric systems.
The revised tax credit is applicable to systems placed in service on or after January 1, 2007. Taxpayers wishing to use this tax credit must first apply through the Utah State Energy Program before claiming the tax credit against their Utah state taxes.
The individual income tax credit for residential systems is 25% of the reasonable installed system costs up to a maximum credit of $2,000 per residential unit. For solar PV systems, the maximum credit decreases over time as follows: For systems installed before 12/31/2017 the maximum credit is $2,000; before 12/31/2018 - $1,600; before 12/31/2019 - $1,200; before 12/31/2020 - $800; and before 12/31/2021 - $400. The residential tax credit expires on 12/31/2021.
The residential credit is nonrefundable, but unused credit may be carried forward for up to four years. A non-business entity that leases a residential system is eligible for the credit and may use the credit for no more than seven years from the initiation of the lease.
Eligible residential systems include active and passive solar thermal systems; solar electric systems; wind turbines; hydro (water) energy; geothermal heat pumps; direct-use geothermal; and biomass. Note that eligible biomass systems must produce either fuel or electricity. Biomass heating systems are not eligible.
Under the corporate tax credit language, a builder can take a tax credit for the installation of a renewable energy system on a residential unit.
The tax credit for commercial systems is structured as a refundable credit. Eligible commercial systems include active and passive solar thermal systems; solar electric systems; wind turbines; hydro (water) energy; geothermal heat pumps; direct-use geothermal; and geothermal electricity; and biomass systems. Note that eligible biomass systems must produce either fuel or electricity. Biomass heating systems are not eligible. Renewable energy systems may be used to supply energy to a commercial unit or as a commercial enterprise selling the energy. S.B. 14, passed in 2015, clarified that the corporate tax credit can be applied by any taxpayer that owns a "commercial energy system", and thereby eliminated the requirement that a "business entity" is the only one who can take the corporate credit.
Investment Tax Credit
For wind, geothermal electric, and biomass systems with a total capacity of less than 660 kW, solar photovoltaic (PV) systems up to 2 megawatts (MW), and all other eligible renewable energy systems of any size the credit is worth 10% of the reasonable installed costs up to $50,000. A business entity that leases a commercial system is eligible for the credit and may use the credit for no more than seven years from the initiation of the lease.
Production Tax Credit
For commercial wind, geothermal electric, and biomass systems with a total capacity of 660 kW or greater, the credit is 0.35¢/kWh ($0.0035/kWh) for four years. The credit may not be carried forward or back. A business entity that leases a commercial system is also eligible for the credit. Solar PV systems greater than 2 MW may only claim the production tax credit, and systems between 660 kW and 2 MW can choose either the production tax credit or the investment tax credit.