North Carolina Reenacts Solar Energy Tax Credit for Equipment Placed in Service Starting in 2025

Original title: Reenact Solar Energy Tax Credit.

Last action · February 18, 2025: Ref To Com On Rules, Calendar, and Operations of the House (House action)Sponsors: Allen Buansi and 33 others

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What This Bill Would Do

North Carolina reenacts a 35% tax credit for qualifying solar energy equipment and renewable energy property during the taxable year, effective for taxable years beginning on or after January 1, 2025.

Why it matters

Taxpayers investing in solar and renewable energy installations become eligible for state tax credits up to statutory dollar ceilings based on whether the property serves business or nonbusiness purposes.

Who It Would Affect

Groups the bill's text would affect if enacted, as described in the record. Being affected is not a position for or against it.

Directly affected

Taxpayers

Taxpayers who construct, purchase, or lease qualifying solar energy equipment become eligible for a 35% state tax credit subject to specific installment rules and statutory ceilings.

Directly affected

Lessor of renewable energy property

Lessors must provide tenants requesting it a statement describing the property and its cost, and must supply written certification not to claim the credit themselves if the lessee is to claim it.

Key Facts

Allows a tax credit equal to thirty-five percent (35%) of the cost of qualifying solar energy equipment placed in service in the State during the taxable year.
Establishes a business ceiling of two million five hundred thousand dollars ($2,500,000) for each installation of solar energy equipment placed in service for a business purpose.
Sets nonbusiness ceilings including $1,400 per dwelling unit for domestic water heating, $3,500 for active space heating and combined systems, $8,400 for geothermal equipment, and $10,500 for other renewable energy property.
Applies an Eco-Industrial Park ceiling of five million dollars ($5,000,000) for each qualifying business installation certified under G.S. 143B-437.08.

Show all 8 facts

Requires nonbusiness credits to be taken in the year placed in service, while business credits must be taken in five equal installments beginning with the year placed in service.
Disallows credits to the extent the cost of the property was provided by public funds, excluding grants made under section 1603 of the American Recovery and Reinvestment Tax Act of 2009.
Prohibits taxpayers from claiming the credit if they lease the property unless they obtain the lessor's written certification that the lessor will not claim a credit under the Chapter.
Provides delayed sunset conditions requiring timely application, a nonrefundable fee of $1,000 per megawatt of capacity (minimum $5,000), and verification of incurred costs and physical construction.

Frequently Asked Questions

What is the tax credit percentage for installing solar energy equipment?

The credit is equal to thirty-five percent (35%) of the cost of qualifying solar energy equipment in North Carolina during the taxable year.

How is the tax credit distributed for business-purpose solar installations?

For business-purpose renewable energy property, the entire credit must be taken in five equal installments beginning with the taxable year in which the property is .

What are the dollar limits for nonbusiness solar installations?

Nonbusiness ceilings are $1,400 per dwelling unit for domestic water heating, $3,500 per dwelling unit for active space heating and combined systems, $8,400 for each geothermal equipment installation, and $10,500 for each installation of any other renewable energy property.

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Where This Stands

Currently in committee. The next step in the legislative lifecycle is Floor Vote.

Procedural history

3 actions

Feb 18, 2025House
Ref To Com On Rules, Calendar, and Operations of the House
Feb 18, 2025House
Passed 1st Reading
Feb 13, 2025HouseIntroduced
Filed

Version history

Only one version on file - nothing to compare yet. As later stages (committee substitute, engrossed, enrolled) are captured, the redline appears here.

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