At a time when many federal energy tax credits are about to expire as part of the so-called “fiscal cliff,” states are receiving even more pressure to support the alternative energy industry.
However, offering renewable energy tax credits to taxpayers is expensive for states. In Hawaii, for example, the number of energy credits claimed is expected to be $173.8 million, up from $42.8 million in energy credits claimed in 2010, according to a Statelinearticle. By itself, that is a lot of money, but it’s even more shocking when you consider that Hawaii’s entire budget is about $12 billion total, the article notes.
Last year, Oregon replaced its business energy tax credit with other energy credits in order to deal with rising costs, according to the Stateline article. But the business energy tax credit ended up “costing 40 times its projected price tag,” the article reports.
Even seemingly minor tweaks to existing state credit programs can elicit howls of protest from stakeholders.
When the Hawaii’s Department of Taxation recently issued temporary regulations for certain solar energy systems, aimed at clarifying how the renewable energy technologies credit should be calculated, environmental groups, such as the Sierra Club, threatened to file a lawsuit, according to a Honolulu Civil Beatarticle. Opponents of the regulations argue that they will have a devastating impact on the solar industry in Hawaii.
As a result of the regulations, the number of credits that may be claimed by taxpayers is reduced. Homeowners may only claim one credit per system. Meanwhile, commercial taxpayers may continue to claim more than one credit but the number of credits that may be claimed is now reduced as well, based on each system’s size, according to the Honolulu Civil Beatarticle.
For more information about Hawaii’s renewable energy technologies credit and Oregon’s renewable energy credits, check out Bloomberg BNA’s Green Incentives Navigator.
In other developments . . .
The Vermont Department of Taxes issued a bulletin explaining the income tax credit for contributions to the Vermont Higher Education Investment Plan, according to a Bloomberg BNA Weekly State Tax Reportarticle.
By: Kathleen Caggiano
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