Solar and Wind Energy Device Franchise Tax Deduction

Summary

Texas allows a corporation to deduct the cost of a solar energy device from the franchise tax in one of two ways:

• The total cost of the system may be deducted from the company's taxable capital or,
• 10% of the system's cost may be deducted from the company's income.  

Both taxable capital and a company's income are taxed under the franchise tax, which is Texas's equivalent to a corporate tax. 

For the purposes of this deduction, a solar energy device means "a system or series of mechanisms designed primarily to provide heating or cooling or to produce electrical or mechanical power by collecting and transferring solar-generated energy. The term includes a mechanical or chemical device that has the ability to store solar-generated energy for use in heating or cooling or in the production of power." Under this definition wind energy is also included as an eligible technology.

Texas also offers a franchise tax exemption for manufacturers, seller, or installers of solar energy systems which also includes wind energy as an eligible technology.