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Wednesday, June 6, 2012
As states offer more and more renewable energy tax incentives, small businesses are seeking to take advantage of the situation by getting into the renewable energy business. But, depending on the business’ location, the difference between each state’s incentives can be dramatic.
For example, a small solar energy business headquartered in Virginia does most of its installments in Maryland, where there are several solar energy incentives available, according to an article in the LortonPatch. In fact, 90 percent of the company’s installations are done in Maryland due to the incentives available there, the article noted.
Maryland offers seven solar-related tax incentives, according to according to Bloomberg BNA’s Green Incentives Navigator. The incentives include sales tax exemptions, property tax exemptions, and income tax credits related to solar energy. Maryland’s solar energy grant program provides grants of up to $10,000 to install solar energy equipment on residential and business property.
The amount of tax expenditures for Maryland’s corporate solar water heating tax credit during FY 2010 was $0.1 million and, for the state’s solar energy grant program, was $1.5 million. The sales tax exemption for solar energy equipment added up to $0.2 million in FY 2010, according to Maryland’s Tax Expenditures Report.
In Virginia, however, there are very limited solar incentives available to taxpayers. Specifically, Virginia offers a green job creation tax credit and a solar manufacturing incentive grant program, according to according to Bloomberg BNA’s Green Incentives Navigator.
In order to remedy the situation, small business owners are lobbying the state legislature to get more renewable energy legislation passed that will help taxpayers financially and encourage them to invest in renewable energy. Part of the reason that more incentives are not available for solar energy in Virginia is that electricity is inexpensive, the LortonPatch article noted. Perhaps more small businesses will come together to form a sort of grassroots clean energy movement, which will lead to states being more motivated to pass additional renewable energy incentives in the future. In other developments . . . Alabama enacted a new markets tax credit for community development, according to a recent Bloomberg BNA Weekly State Tax Report article by State Tax Law Editor Denise Ryan. The credit is similar to the new market tax credit under I.R.C. § 45D and can be taken against the corporate income, individual income, insurance premiums, and financial institutions taxes for qualified equity investments in a qualified community development entity. By: Kathleen Caggiano
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