Renewable Energy Property Tax Exemption

May 22, 2024

Summary

Massachusetts law provides that solar energy systems and wind energy systems or solar and wind systems that are co-located with an energy storage system that meet the following criteria are exempt from local property tax for a 20-year period: can produce at most 125% of the annual electricity needs of the real property; has a system capacity that is 25 kW or less; or an individual system -- or a combination therein -- that entered into an agreement for payment in lieu of taxes associated with the municipality that the system is located in. A period greater than 20 years may be allowed upon a written agreement between the municipality and the owner of the solar or wind energy system.* Solar, wind, or energy systems owned by a distribution or electric company are not included in the exemption.

Hydropower facilities are also exempt from local property tax for a 20-year period if a system owner enters into an agreement with the city or town to make a payment (in lieu of taxes) of at least 5% of its gross income in the preceding calendar year.

Qualified fuel cell-powered systems built after January 1, 2020, capable of producing -- without combustion -- not more than 125% of the annual energy needs for the real property, are also tax exempt. Fuel cells must be utilized as the primary or auxiliary power system for the real property.

This incentive applies only to the value added to a property by an eligible system. It does not constitute an exemption for the full amount of the property tax bill. 

See the Division of Local Services Information Guideline Release to learn more.

 * Massachusetts' property tax exemption statute includes language that may be interpreted differently from county to county. Check with your county's tax assessors to learn how this exemption is interpreted in your county.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: Massachusetts
Incentive Type: Property Tax Incentive
Web Site: http://www.mass.gov/dor/local-officials/
Administrator: Massachusetts Department of Revenue
Start Date: 1975
Eligible Renewable/Other Technologies:
  • Solar Water Heat
  • Solar Space Heat
  • Solar Thermal Electric
  • Solar Photovoltaics
  • Wind (All)
  • Hydroelectric
  • Wind (Small)
  • Fuel Cells using Renewable Fuels
Incentive Amount: 100% exemption for 20 years
Maximum Incentive: Not specified
Eligible System Size: Not specified
Equipment Requirements: Fuel cells must be utilized as a primary or auxiliary power system to provide heat or other energy to the taxable property

Authorities

Name: M.G.L. ch. 59 § 5 (45, 45A)
Date Enacted: 1975 (subsequently amneded)
Name: Informational Guideline Release 2021-24
Date Enacted: 1984

Contact

Name: Division of Local Services
Organization: MA Department of Revenue
Address: 100 Cambridge St, P.O. Box 9569
Boston MA 02114-9569
Email: dlswebcontacts@dor.state.ma.us

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.