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Minnesota

Minnesota

Incentives/Policies for Renewables & Efficiency

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Wind and Solar-Electric (PV) Systems Exemption   

Last DSIRE Review: 04/25/2013
Program Overview:
State: Minnesota
Incentive Type: Property Tax Incentive
Eligible Renewable/Other Technologies: Photovoltaics, Wind
Applicable Sectors: Commercial, Industrial, Residential
Amount:Solar: 100% exemption from real property taxes
Wind: 100% exemption from real and personal property taxes
Maximum Incentive:None
Eligible System Size:For wind, full exemption without compensating production tax limited to privately-owned systems of 250 kW or less and systems of 2 MW or less owned by political subdivisions.
Authority 1:
Date Effective:
Minn. Stat. § 272.02
01/01/1992
Authority 2:
Date Enacted:
Date Effective:
Minn. Stat. § 272.028
06/30/2001
07/01/2001
Authority 3:
Date Enacted:
Date Effective:
Minn. Stat. § 272.029
05/18/2002 (subsequently amended)
01/01/2003
Summary:
Minnesota excludes the value added by solar-electric (PV) systems installed after January 1, 1992 from real property taxation. In addition all real and personal property of wind-energy systems is exempt from the state's property tax.* However, the land on which a PV or wind system is located remains taxable.

In lieu of a property tax on large wind-energy electricity generating systems, a production tax was implemented in 2002 for systems installed after January 1, 1991. Wind systems greater than 12 MW are taxed at a rate of 0.12 cents/kWh; systems between 2 MW and 12 MW are taxed at a rate of 0.036 cents/kWh; and systems between 250 kW and 2 MW are taxed at a rate of 0.012 cents/kWh. Wind systems less than 250 kW are exempt from the production tax, as are systems with a capacity of 2 MW or less that are owned by political subdivisions, and systems located in a designated job opportunity building zone. The wind energy production tax is considered to be a personal property tax.

For 2006 - 2009 (Minn. Stat. § 272.029 Subd. 6), the revenue generated by the production tax was required to be distributed to local taxing districts as follows: 80% to counties; 14% to cities and townships; and 6% to school districts. For 2010 and thereafter, the distribution of revenues is set at 80% to counties and 20% to cities and townships (H.F. 1298 of 2009). For further details, please see the Minnesota Department of Revenue's Property Tax Administrators' Manual.

Notably, a provision in a separate statute (Minn. Stat. § 272.028) allows a mutually agreeable alternative to be negotiated between the local government authority and the wind facility owner for the purpose of maintaining "public infrastructure and services." For example, a lower tax might be negotiated by a local government in order to attract wind development.

*The enabling statute, Minn. Stat. § 272.02, also contains a variety of other exemptions for electricity generating facilities, including several for certain types of biomass facilities. These exemptions are not addressed in this entry because each has special conditions that greatly restrict its applicability, such that each exemption likely applies only to a single project.

 
Contact:
  Energy Information Center
Minnesota Department of Commerce
Division of Energy Resources
85 7th Place East
Suite 500
St. Paul, MN 55101-2198
Phone: (800) 657-3710
Fax: (651) 297-7891
E-Mail: energy.info@state.mn.us
Web Site: http://www.energy.mn.gov
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Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council, Inc. disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.

Copyright 2013 - 2014 North Carolina State University, under NREL Subcontract No. XEU-0-99515-01. Permission granted only for personal or educational use, or for use by or on behalf of the U.S. government. North Carolina State University prohibits the unauthorized display, reproduction, sale, and/or distribution of all or portions of the content of the Database of State Incentives for Renewables and Efficiency (DSIRE) without prior, written consent.