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Solar Energy Production Tax
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The Solar Energy Production Tax is a tax on the energy produced by means of a solar energy generation system.
A solar energy generating system (SEGS) is a set of devices whose primary purpose is to produce electricity by means of collecting, transferring, or converting solar generated energy.
The Solar Energy Production Tax rate is $1.20 per megawatt hour produced.
The Solar Energy Production Tax applies to SEGS with an alternating current (AC) nameplate capacity exceeding 1 megawatt.
SEGS with an AC nameplate capacity of 1 megawatt or less are exempt from the Energy Production Tax.
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The owner of a SEGS whose primary purpose is to produce electricity by means of any combination of collecting, transferring, or converting solar generated energy must submit a Solar Energy Production report.
Filing
The owner must file the Solar Energy Production report online through our e-Services system. See filing details in the Solar Energy Production Report Instructions.
The owner needs to register for an Energy Production Account before filing by calling Business Registration at 651-282-5225.
Report Deadline
The Solar Energy Production Tax report is due annually on January 15.
An extension of up to 15 days may be granted if the owner submits a written request showing good cause. For more information, visit the extension request instructions webpage.
If the owner of a SEGS does not file on time, we will determine the tax by applying a production rate of 30% to the combined nameplate capacity of the system.
The department determines the tax due and notifies the owner of the SEGS and the counties where the systems are located by February 28.
Counties bill the owner of an SEGS and collect the solar energy production tax. The county where the system is located will send the owner the tax bill. The owner must pay the tax to the county treasurer by May 15.
The department has an optional Energy Production Tax Statement that counties can use for billing the Solar or Wind Energy Production Taxes.
The amount of tax is paid to the county treasurer at the time and manner provided for payment of property taxes. Taxes are considered personal property taxes.
Revenues from solar energy production taxes are part of the settlement between the county auditor and county treasurer. Revenue is distributed as 80% to the county and 20% to the city/township where the systems are located.
Unless the systems are interconnected with different distribution systems, the nameplate capacity of an SEGS shall be combined with the nameplate capacity of any other solar energy generating system if the systems meet both criteria:
- Constructed within the same 12-month period
- Exhibit characteristics of being a single development
The original date of an existing solar energy generating system is not changed if the system is replaced, repaired, or otherwise maintained or altered.
In the case of a disagreement with the department of revenue on the combined nameplate capacity of the system, the department of commerce shall determine the total size of the system.
If the real property that the solar energy generating system is located on is used primarily for solar energy production subject to the solar energy production tax, the real property is classified as 3a.
If the real property that the solar energy generating system is located on is not used primarily for solar energy production subject to the solar energy production tax, the real property is classified without regard to the solar system. If the real property has more than one solar energy generating system, that together have a nameplate capacity over one megawatt, then the real property is classified as 3a, even though the systems are not subject to the solar energy production tax.
