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The inconsistent property tax treatment of solar photovoltaic (PV) systems by Connecticut municipalities has created impediments to their development. These impediments run counter to the State’s policies seeking to promote various renewable energy sources such as solar. A bill recently introduced in the Connecticut General Assembly proposes a new approach to the taxation of solar PV systems that will offer developers and owners the predictability they seek.
House Bill No. 6764 begins by exempting from traditional property taxation the equipment and devices that comprise solar PV systems with a capacity (defined as the “aggregate alternating current nameplate capacity” of the equipment) greater than 25 kilowatts. The proposed exemption does not include the underlying land and would be effective October 1, 2023.
In lieu of property taxes, the owners of solar PV systems will pay an annual tax of $5 for each kilowatt of capacity to the State Commissioner of Revenue Services. The payment will accompany a return to be filed with the Commissioner by July 1 of each year covering the preceding calendar year. One half of the payments received for this new capacity tax will stay at the State level. The other half will be deposited into a “solar uniform capacity tax account” for distribution to municipalities in proportion to the total capacity of solar PV systems that they host.
House Bill No. 6764 is scheduled for a public hearing before the General Assembly’s Energy and Technology Committee on March 2, 2023 at 11:00 a.m. Owners and developers of solar PV systems as well as municipalities can weigh in on whether this innovative approach, the proposed rate of taxation and the revenue split are acceptable.
Alternatively, Senate Bill No. 519 is a competing bill that would prevent solar projects from .5 megawatts up to 7 megawatts from receiving a possible property tax exemption, thereby ensuring that they will be subject to the current local property taxation regime. This bill is scheduled for a public hearing before the Legislature’s Planning and Development Committee on March 3, 2023 at 11:00 a.m.
Should you have any questions, please contact Greg Servodidio, chair of the firm’s Property Tax and Valuation Department.
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Alerts, commentary, and insights from the attorneys of Pullman & Comley’s Property Tax and Valuation practice with timely information for businesses, nonprofits and individuals in commercial property tax appeals and eminent domain matters.