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Hodgson Russ's Clean and Green Law

New York’s Tax Incentive Programs for Renewable Energy Projects

Posted in Tax Incentives

As a tax attorney based in New York State, much of my practice focuses on the tax incentives New York offers for renewable energy projects. In this blog post, I thought it would be useful to review three lesser known New York tax incentive programs.

Clean heating fuel credit. New York provides a refundable corporate franchise tax credit for biodiesel purchases used for residential space heating and water heating purposes. The credit is refundable to the extent it exceeds the tax liability (though some restrictions of the refund amount/timing may apply). The credit is equal to $0.01/gallon for each percent of biodiesel blended with conventional home heating oil, up to a maximum of $0.20/ gallon. In other words, the purchaser of a mixture of 15 percent biodiesel and 85 percent conventional heating oil is entitled to a tax credit of $0.15/gallon. This tax credit is available through 2016. Additional information on clean heating fuel credit is available on the Department of Taxation and Finance’s website.

Biofuel production credit. New York provides a refundable corporate franchise and personal income tax credit of $0.15/gallon of biofuel after the production of the first 40,000 gallons per year presented to market. The credit is capped at $2.5 million per taxpayer per tax year for up to no more than four consecutive tax years per biofuel plant. This credit is available through 2019. Additional information on biofuel production credit is available on the Department of Taxation and Finance’s website.

Solar energy system equipment credit. New York provides a personal income tax credit equal to 25 percent of qualified solar energy system equipment expenditures. The credit is capped at $5,000. Solar-energy equipment is defined as “an arrangement or combination of components utilizing solar radiation, which, when installed in a residence, produces energy designed to provide heating, cooling, hot water, or electricity.” The credit may not be used for pool heating or other recreational applications. Any amount of credit that exceeds a taxpayer’s liability in a given tax year may be carried forward for the five following taxable years. The credit is not refundable Members of condominium management associations and tenant stockholders of cooperative housing associations are allowed to claim a proportionate share of the total system expense towards the tax credit The credit has no expiration date. Additional information on solar energy system equipment credit is available on the Department of Taxation and Finance’s website.

There is also an exemption from state sales taxes for purchases and installations of residential solar energy systems. The exemption applies to solar energy systems that utilize solar radiation to produce energy designed to provide heating, cooling, hot water, and/or electricity. The exemption does not apply to solar pool heating or other recreational applications. There is not an expiration date for this incentive Finally, the exemption applies to certain local sales taxes as well.

Obviously additional terms and restrictions apply to each of these programs. But this hopefully this post increases awareness and use of these programs.