Governor Branstad today signed Senate File 2340, a key tax incentive bill for solar energy. The law triples the size of Iowa’s successful solar tax incentive program and makes additional improvements to the program. The legislation received wide bipartisan support at the statehouse, with the Iowa Senate passing it with a unanimous vote of 46-0 and the Iowa House passing it with a vote of 88-4. The Iowa solar tax incentive matches a portion of an existing federal tax incentive for solar thermal and solar photovoltaic (PV) energy.
Senate File 2340 increases the annual cap available for solar tax credits from $1.5M to $4.5M. As solar energy grows in Iowa, demand for the tax credits exceeded the cap in 2013 by almost $1M, according to the latest information available from the Iowa Department of Revenue. Increasing the cap to $4.5M will help ensure that any Iowa taxpayer that installs solar can benefit from the Iowa solar tax incentive.
The legislation also does the following to improve the solar tax incentive program:
- Allows taxpayers to claim multiple credits in a single year for multiple solar installations. This is already allowed under the federal program and will, for example, help businesses install solar at multiple business locations in a single year.
- Increases the cap for residential tax credits from $3,000 to $5,000 and for business tax credits from $15,000 to $20,000.
- Increases the Iowa credit from 50% of the federal credit to 60% of the federal credit.
- Reserves a portion of the annual cap for residential tax credits.
- Allows any unclaimed credits in a given year to roll over and be available in subsequent years.
The legislation promises to boost solar installations across Iowa. The current tax credit cap of $1.5M supported approximately 2-3 megawatts (MW) of solar PV in a given year and supported installations in 59 Iowa counties. Increasing the cap to $4.5M could boost that to 8 MW – or more – annually.
In addition to SF 2340, Gov. Branstad also signed an important bill, SF 2343, to extend production tax credits for wind and improve a pilot tax credit for combined heat and power.
More information about solar energy in Iowa is available here.