NC has the best tax credits in the U.S. Here we present links and information that we hope will help you get details about them and file the paperwork. The best starting point is the NC Department of Revenue's Guidelines For Determining Tax Credit For Investing In Renewable Energy Property. This excellent document (co-drafted by our own Richard Harkrader and the Solar Center's Bob McGuffey for the DoR) details the categories of installations and the maximum credits in each, and exactly which items of equipment qualify and which do not.

          The DoR summarizes the credits thusly:

          Subsection (a) of new G.S. 105-129.16A provides a tax credit equal to 35% of the cost of renewable energy property constructed, purchased, or leased by a taxpayer and placed into service in this State during the taxable year. If the property serves a single-family dwelling, the credit is taken for the taxable year in which the property is placed in service. For all other property, the credit is taken in five equal installments beginning with the year the property is placed in service. The credit can be applied against franchise tax or income tax. Subsection (b) provides that the credit expires and any remaining installments of the credit may not be claimed if the property is disposed of, taken out of service, or moved out of the State during the five-year installment period. Subsection (c) imposes ceilings on the credit. For nonresidential property, the credit ceiling is $250,000 per installation. For residential property, the ceilings are:

• $1,400 per dwelling unit for solar energy equipment for domestic water heating
• $3,500 per dwelling unit for solar energy equipment for active space heating, combined active space and domestic hot water systems, and passive space heating
• $10,500 per installation for any other renewable energy property for residential property.

Disclaimer: the following information has been gleaned from the tax forms and instructions published by the NC Department of Revenue. Our interpretation of those has not been endorsed or reviewed by the Department of Revenue or a tax accountant.

 We're glad you asked! The forms you need (for residential or commercial) are:

1. NC-478G "Investing in Renewable Energy Property". This is now included in the DoR website listing from which you can request forms be mailed to you. Or you can get one by calling the forms request number (919) 715-0397. Be prepared to ask for this form by number; the workers manning the telephones do not seem to know it exists. Once you get it, use the Guide (mentioned above) to determine the eligible cost(s) to enter and follow the form through to come up with the credit to be taken in tax year 2000. This amount is next entered on...
2. NC-478 "Summary of Tax Credits Limited to 50% of Tax", Part 1, Line 7. Here your credit is summed with other credits (such as for creating jobs, building low-income housing, etc.) and then compared to ensure the credit does not come to over 50 percent of your total tax liability.

   After this the flow becomes murky. For individual taxpayers the result seems to belong on...

3. D-400TC "Individual Tax Credits" Part 4, Line 25: "Miscellaneous Tax Credits". Unfortunately, the instructions in the tax booklet (p. 14) make no mention of the renewable energy credit. [If it is any consolation, they also do not mention several other credits that appear on NC-478.] Part 4 totals up on line 31, and this is entered on your basic tax form...
4. D-400, line 14. This is the basic income tax form which comes in the tax booklet.

   For corporate taxpayers, the result from NC-478 goes onto CD-425 "Corporate Tax Credit Summary", line 21. The result from this form goes to either CD-401S (for S corporations), or CD-405 (for C corporations).

          The DoR form request web page, once again, is

          We regret that we cannot provide the forms for downloading. The DoR has strict (and understandable) rules about reproducing tax forms, so we'll leave that job to their printer.

          In addition to applying for tax credits, we would appreciate it if you would register your system for inclusion in the Million Solar Roofs Initiative database. The data helps NCSEA and the Solar Center determine the effect of our efforts. You do not have to supply any personal identifiying information. All you need to do is download the form, fill it out, and mail it to the Solar Center.

          If your installation is of a commercial, not residential, nature, please see the Federal tax credits section, below.

          If you go to the Department of Revenue looking for information beyond what we list here, you may run into some difficulties. You can avoid pitfalls by knowing that:

• The credits were simplified and expanded in 2001 to cover additional technologies, so they are now called "renewable energy" instead of "solar" tax credits. If you search the DoR web site for "solar" credits you will find outdated information.
• The DoR does not specifically list renewable energy tax credits on the individual income tax credit form (D-400TC) or in the instructions in the tax booklet.

Federal Credits and Loan Programs

Investment Tax Credit for Solar Energy Property

          The 10% investment Tax Credit for Businesses is permanently extended as part of EPAct 1992. Any commercial entity which invests in or purchases qualified solar energy property can take credit. Only commercial entities are eligible. The main applicable paperwork is IRS Form 3468. We also have Instructions for Form 3468. [Both are in .pdf format. Since the IRS may alter the forms without notifying us, these are posted for your edification only; please refer to the official forms site for current versions.] All you have to know about your renewable energy equipment is its cost, which is entered on line 2. For a sole proprietorship the tax credit comes back into Form 1040 on line 50; for corporations it goes onto Form 1120, Schedule J, line 6d; Form 1120-A, Part I, line 4a; Form 1041, Schedule G, line 2c; or the applicable line of your return. The Federal definition of energy property is: 1. Equipment that uses solar energy to generate electricity, to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat or 2. Equipment used to produce, distribute, or use energy derived from a geothermal deposit (within the meaning of (Schedule section 613(e)(2)). Use IRS Form 3468. Click here to download the form as a .pdf file. Click here to download th instructions.

          Available to: Any commercial entity in all 50 states is eligible.

          Eligible Technology: Photovoltaics, Solar Hot Water, and Energy Storage equipment

Investment Tax Credit Frequently Asked Questions (courtesy SEIA):

          Q. Are there limitations on the amount of credit I can take_

          A. In any one year you may not take any tax credit that exceeds the total tax owed. The allowable tax credit for any one year is also limited to $25,000, plus 25% of the total tax remaining after the credit is taken. For example, if you are allowed the full 10% credit for an investment of $500,000, which is $50,000, and you owe $100,000 in taxes, you may take $25,000 plus 25% of the remaining $75,000 ($18,750), which equals $43,750. Credit not allowable in one year may be taken in other tax years (see below).

          Q. Do I have to use the credit in the year the purchase or investment is made_

          A. No. If you cannot use part or all of the credit because of tax liability limitations, you may carry any excess back to each of the three preceding years, beginning with the earliest. If you have an unused credit after carryback, it may be carried forward to each of the 15 years after the year of the credit.

          Q. Are there special tax forms needed to take the credit_

          A. Yes. You will need form 3486 (Investment Credit), and you may need form 3800 (General Business Credit) and their corresponding instruction forms.

          Additional Info: Contact your accountant or tax professional.

          web:

Accelerated Capital Depreciation for Solar Energy Property

          The US Government offers a 5 year Accelerated Capital Depreciation for any commercial entity which invests in or purchases qualified solar energy property. Only commercial entities are eligible. This is part of the US Code Citation: 26 USC Section 168.

          Available to: Any commercial entity in all 50 states is eligible

          Eligible Technology: Photovoltaics, Solar Hot Water, and Energy Storage equipment

          Additional Info: The United States Government Internal Revenue Service, or contact your accountant or tax professional.

          web:

USDA Rural Business Enterprise Grant

          This grant program is to facilitate the development of rural small business enterprises. Eligible activities include land acquisition, construction, rehabilitation, building, roads, utilities. Contact your local USDA office for more information.

          Available to: Rural, commercial, public, not-for-profit or Native American Tribal groups

          Eligible Technology: photovoltaics, Solar Hot Water and all Home Energy Upgrades.

          Additional Info: Local USDA Rural Development Offices

          web:

Small Business Administration 7A+02 Energy Loan Program

          The Small Business Administration offers loan guarentees for up to $750,000 or 75% of loan amount or up to 80% of loan amounts under $100,000. Maximum interest rate is prime plus 2.75%. Terms for working capital is 7 years, equipment is 10 years, and building is 25 years.

          Available to: Small Businesses throughout the United States

          Eligible Technology: Photovoltaics, Solar Thermal Systems

          Additional Info: US Small Business Administration

          Contact your local SBA office

          web:
 

Other States' Incentives

          This link takes you to the Database of State Incentives for Renewable Energy, maintained by the NC Solar Center.
 

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