North Carolina Renewable Energy Tax Credit (Corporate)

North Carolina offers a tax credit equal to 35% of the cost of eligible renewable energy property constructed, purchased or leased by a taxpayer and placed into service in North Carolina during the taxable year.

State: North Carolina
Incentive Type: Corporate Tax Credit
Eligible Renewable/Other Technologies: Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Heat Pumps, CHP/Cogeneration, Spent pulping liquor, Solar Pool Heating, Daylighting, Anaerobic Digestion, Ethanol, Methanol, Biodiesel, Geothermal Direct-Use
Applicable Sectors: Commercial, Industrial, Agricultural
Amount: 35%
Maximum Incentive: $2.5 million per installation*
Eligible System Size: No stated size limits for systems. Maximum of 50 kWh battery storage capacity per kW of hydro generator capacity (DC rated); maximum of 35 kWh battery storage capacity per kW for other technologies
Equipment Requirements: System must be new and in compliance with all applicable performance and safety standards. Specific equipment and installation requirements vary by technology.
Carryover Provisions: Credit must be taken in five equal installments; allowable credit may not exceed 50% of a taxpayer’s state tax liability for the year, reduced by the sum of all other state tax credits.
Expiration Date: 12/31/2015
Authority 1:
Date Enacted:
Date Effective:
Expiration Date:
N.C. Gen. Stat. § 105-129.15 et seq.
1977 (subsequently amended)
1977
12/31/2015
Authority 2:
Date Enacted:
Date Effective:
SB 388
6/7/2010
1/1/2009
Authority 3:
Date Enacted:
Date Effective:
HB 1829
8/2/2010
8/2/2010
Authority 4:
Date Enacted:
Date Effective:
HB 1973
7/22/2010
7/22/2010
Authority 5: NC Tax Credit Guidelines

Note: House Bill 1829 of 2010 made several changes to this tax credit. One of those changes is the eligibility of combined heat and power systems, as defined by Section 48 of the U.S. Tax Code, for the tax credit. HB 1829 does not provide an effective date for this section of the bill. Presumably any combined heat and power system installed in North Carolina after the general effective date of the bill, August 2, 2010, is eligible for this tax credit.

North Carolina offers a tax credit equal to 35% of the cost of eligible renewable energy property constructed, purchased or leased by a taxpayer and placed into service in North Carolina during the taxable year. The credit has been amended several times since its original inception. House Bill 512 of 2009 extended the eligibility to geothermal equipment, extended the expiration date to December 31, 2015, and allowed the credit to be taken against the Gross Premiums Tax. HB 1829 of 2010 further extended this credit to combined heat and power systems. The credit is subject to various ceilings depending on sector and the type of renewable-energy system. The following credit limits for various technologies and sectors apply:

  • A maximum of $3,500 per dwelling unit for active solar space heating, combined active solar space and domestic water-heating systems, and passive solar space heating used for a non-business purpose;
  • A maximum of $1,400 per installation for solar water-heating systems, including solar pool-heating systems used for a non-business purpose;
  • A maximum of $8,400 for geothermal heat pumps and geothermal equipment that uses geothermal energy for water heating or active space heating or cooling used for a non-business purpose;
  • A maximum of $10,500 per installation for photovoltaic systems (also known as PV systems or solar-electric systems), wind-energy systems, combined heat and power systems, or certain other renewable-energy systems used for a non-business purpose
  • A maximum of $2.5 million* per installation for all solar, wind, hydro, geothermal, combined heat and power, and biomass applications** used for a business purpose***, including PV, daylighting, solar water-heating and space-heating technologies.

Renewable-energy equipment expenditures eligible for the tax credit include the cost of the equipment and associated design; construction costs; and installation costs less any discounts, rebates, advertising, installation-assistance credits, name-referral allowances or other similar reductions provided by public funds. It should be noted that SB 388 of 2010 clarified that federal grants made available by Section 1603 of the American Recovery and Reinvestment Tax Act of 2009 do not constitute public funds.

The allowable credit may not exceed 50% of a taxpayer’s state tax liability for the year, reduced by the sum of all other state tax credits. Qualifying renewable-energy systems used for a non-business purpose must take the maximum credit amount allowable for the tax year in which the system is installed. If the credit is not used entirely during the first year, the remaining amount may be carried over for the next five years.

For all other taxpayers, the credit is taken in five equal installments beginning with the year in which the property is placed in service. If the credit is not used entirely during these five years, the remaining amount may be carried over for the next five years. The credit can be taken against franchise tax, corporate tax, income tax, or in the case of insurance companies, against the gross premiums tax.

SB 3 of 2007 amended North Carolina’s renewable energy tax credit statute to allow a taxpayer who donates money to a tax-exempt nonprofit to help fund a renewable energy project to claim a tax credit. The donor may claim a share of the credit — proportional to the project costs donated — that the nonprofit could claim if the organization were subject to tax. HB 2436 of 2008 applied this same mechanism to donations made to units of state and local governments.

Click the links below to access relevant 2010 tax forms and instructions from the N.C. Department of Revenue.

* House Bill 1973 of 2010 specified that systems installed for business purposes at a site that has been certified as an eco-industrial park by the Secretary of Commerce are subject to a higher tax credit cap of $5 million. Section 5.1 of the bill describes the characteristics required to be deemed an eco-industrial park.

** The NC Tax Credit Guidelines and the NC Statutes, both linked to above, provide a description of the types of biomass and biomass applications that are eligible for the tax credit. Note residential wood burning stoves do not qualify for the NC state tax credit. If they meet certain energy efficiency standards, however, they may qualify for a tax credit from the federal government.

***HB 1829 of 2010 states “renewable energy property is placed in service for a business purpose if the useful energy generated by the property is offered for sale or is used on-site for a purpose other than providing energy to a residence.”

Contact:
Brian Lips
North Carolina Solar Center
Campus Box 7401
North Carolina State University
Raleigh, NC 27695-7401
Phone: (919) 515-3954
E-Mail: brian_lips@ncsu.edu
Web Site: http://www.ncsc.ncsu.edu

Public Information
Department of Revenue
Post Office Box 25000
Raleigh, NC 27640-0640
Phone: (877) 252-3052
Phone 2: (877) 308-9103
Web Site: http://www.dornc.com/

Source: www.DsireUSA.org

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