Zero-Emission Facilities Production Tax Credit

Summary

Note: Systems entering service on or after January 1, 2021 cannot qualify for this credit. The credit will no longer be available for all systems beginning in 2022.

For tax years beginning on or after January 1, 2003 and before December 31, 2021, a state income tax credit is available to producers of electric power using renewable energy resources from a zero-emission facility located in Oklahoma. The zero-emission facility must have a rated production capacity of 1 megawatt or greater. The facility must be placed in operation after June 4, 2001, and the electricity must be sold to an unrelated party.

Eligible Technologies

Eligible renewable energy resources include wind, moving water, sun, and geothermal energy. The construction and operation of the zero-emission facility must result in no pollution or emissions that are or may be harmful to the environment, as determined by the Department of Environmental Quality.

Tax Credit Amount

The amount of the credit varies depending on when the electricity is generated. Credits may be claimed for electricity generated on or after January 1, 2003, during a 10-year period following the date that the facility is placed in operation.

Facilities placed in operation before January 1, 2007:

• For electricity generated on or after January 1, 2003, but prior to January 1, 2004, the amount of the credit is $0.0075 per kilowatt-hour (kWh) of electricity generated. 
• For electricity generated after January 1, 2004, but prior to January 1, 2007, the amount of the credit is $0.0050 per kWh. 
• For electricity generated after January 1, 2007, but prior to January 1, 2012, the amount of the credit is $0.0025 per kWh.
  

Facilities placed in operation on or after January 1, 2007, and before January 1, 2021 (or January 1, 2017 for wind):

• The amount of the credit for the electricity generated on or after January 1, 2007, is $0.0050 per kWh.
  

Process

To claim this credit, applicants must complete Tax Form 511CR, Schedule for Other Credits.

For credits generated before January 1, 2014, the tax credit is freely transferable at any time during the 10 years following the year of qualification. This includes transfers or sales from non-taxable entities to taxable entities and transfers or sales from one taxable entity to another. 

For credits generated on or after January 1, 2014, the Oklahoma Tax Commission can refund the taxpayer 85% of the face value of the tax credits at the taxpayer's request. The direct refund is available to all taxpayers including pass-through entities, but not nontaxable entities. Nontaxable entities will still be able to transfer or sell credits to taxable entities. If the taxpayer does not elect to receive a direct refund, excess credits can be allocated to one or more shareholders, partners, or members of the taxpayer entity.

Non-Tax-Paying Entities

Any nontaxable entities, including agencies of the State of Oklahoma or political subdivisions, are eligible to establish a transferable tax credit. This tax credit is a property right available to a state agency or political subdivision of Oklahoma to transfer or sell to a taxable entity (individual or corporate) who has an actual or anticipated income tax liability.