Renewable Energy Tax Credit (Corporate)

Summary

In April 2008, Kentucky enacted legislation establishing a 30% state income tax credit for certain solar, wind and geothermal installations on single or multi-family residences and on commercial property. Kentucky corporate taxpayers may take the 30% credit on any of the following equipment installed on commercial property:

• Active or passive solar space-heating systems
• Combined active solar space-heating and water-heating systems
• Solar hot water systems
• Wind turbines

In addition, Kentucky corporate taxpayers may take a credit equal to $3 per watt (DC) of rated capacity for the installation of a photovoltaic (PV) system. Solar and wind technologies have a maximum tax credit of $500 if installed on a single family residential rental unit, and $1,000 for multi-family residential rental units or commercial property.

Kentucky corporate taxpayers may also take a 30% tax credit, up to $250, for closed-loop geothermal heat pumps, open-loop geothermal heat pumps, direct expansion (DX) geothermal heat pumps installed on single or multi-family rental residential properties which they own. This is not applicable to any other commercial property.

To be eligible, wind and solar hot water equipment must have a manufacturer’s warranty of five years or more. Solar hot water systems must also have an installer's warranty of two years or more, and must use collectors certified by the Solar Rating and Certification Corporation (SRCC) under OG-100. Solar energy systems must be installed by a North American Board of Certified Energy Practitioners (NABCEP)-certified installer. PV panels and inverters must meet article 690 of the National Electrical Code (NEC) and be certified by Underwriters Laboratories (UL).

Wind turbines must meet the wind industry consensus standards developed by the American Wind Energy Association (AWEA) and U.S. Department of Energy. Wind turbines must also meet the requirements of article 705 of the NEC, and must be UL-certified. Geothermal systems must meet certain guidelines for their Energy Efficiency Ratio (EER) and Coefficient of Performance (COP).

The credit may be carried forward for one year. It is effective for taxable years 2009-2015. To claim the tax credit, use Form 5695-K - Kentucky Energy Efficiency Products Tax Credit - Form 41A720-S7 available on the Kentucky Department of Revenue web site.