Tax Credit for Solar Energy Systems on Residential Property (Personal)

Louisiana provides a tax credit for solar photovoltaic (PV) systems purchased and installed on or after January 1, 2008 and before January 1, 2018. The credit may be applied to personal, corporate or franchise taxes, depending on the entity which purchases and installs the system, but the system must be installed at a single-family residence to be eligible (systems installed at residential rental apartments were made ineligible by HB 705 of 2013). Only one credit may be taken per system, so if the property is sold, the taxpayer who originally claimed the credit must disclose this, as the new owner will not be eligible for another tax credit on the same system. Each residence is limited to just one credit. A second system installed at the same residence is ineligible for a credit. The tax credit can be applied only for solar photovoltaic (PV) systems. Effective June 19 2015, solar-thermal systems are ineligible for the tax credit. 

For systems purchased between January 1, 2014 and July 1, 2015, the credit is equal to 50% of the first $25,000 of the cost of each system, including installation costs. Any systems purchased or installed after July 1, 2015 and before January 1, 2018 will equal the lesser of $2 per watt (DC), 50% of the cost, or $10,000. 

The credit must be fully claimed in the taxable year in which the system is installed and placed in service. Equipment added at a later date cannot utilize any existing system components in order to qualify for the tax credit. Any excess credit which exceeds the taxpayer's liabilities for that year shall be treated as an overpayment, and the DOR will issue a refund for the remaining amount within one year of receiving the claim.

For photovoltaic (PV) systems, the tax credit applies to AC or DC generation systems which are grid-connected, net-metered systems (with or without battery backup) and stand-alone systems. 

Electrical equipment must be tested and certified by a Federal Occupational Safety and Health Administration (OSHA) nationally recognized testing laboratory and installed in compliance with all applicable building and electrical codes. 

This tax credit may be combined with any federal tax incentive, but it may not be combined with any other state tax incentive. Whenever additional incentives such as cash rebates, prizes or gift certificates are offered in addition to the tax credit, the eligible cost must be reduced by the value of the additional incentive received.

Systems leased by a third party and used at a residence can qualify for a tax credit, but there are additional provisions in the law that apply to these systems. For leased systems that are installed before January 1, 2014, the value of the credit will be reduced to 38% of the first $25,000 of the cost of each system. Systems installed after January 1, 2014 and before January 1, 2018, will receive credit of $38% of the first $20,000 of the cost of the system. 

Additionally, leased systems can be no larger than 6 kilowatts (kW). The law also sets maximum system costs for leased systems. A leased system can claim system costs that do not exceed these limits depending on the year it is placed in service:

• Placed in service between 7/1/13 - 6/30/14: $4.50 per watt with $12,500 limit

• Placed in service between 7/1/14 - 6/30/15: $3.50 per watt with $9,500 limit

• Placed in service between 7/1/15 - 12/31/17: $2.00 per watt with $4,560 limit