Local Option- Renewable Energy Machinery and Tools Property Tax Exemption

Program Overview

Virginia Property Tax Incentive for Renewable Energy
Implementing Sector State
Category Financial Incentive
State Virginia
Incentive Type Property Tax Incentive
Web Site https://law.lis.virginia.gov/vacode/title58.1/chapter36/section58.1-3661/
Start Date 07/01/2015
Eligible Renewable/Other Technologies Geothermal Electric, Solar Photovoltaics, Wind (All), Biomass, Hydroelectric, Municipal Solid Waste, Combined Heat & Power, Landfill Gas, Tidal, Wave, Anaerobic Digestion, Microturbines
Applicable Sectors Commercial, Construction, Industrial, Nonprofit, Residential, Installers/Contractors, Agricultural, Integrators
Incentive Amount Depends on the local governing body
Equipment Requirements Must be used directly in producing or generating renewable energy, including machinery and tools used in repair and replacement parts.

Summary

HB 1297 enacted in March 2015 provides option for local governing body of any county, city, or town to impose a different property tax on renewable energy generating machinery and tools than other normal use machinery. The rate of property tax imposed must not exceed that is applicable to the general class of machinery and tools. 

Renewable energy means energy derived from sunlight, wind, falling water, biomass, sustainable or otherwise (definitions liberally constructed), energy from waste, landfill gas, municipal solid waste, wave motion, tides, or geothermal power and does not include energy derived from coal, oil, natural gas, or nuclear power. 

This rate of tax does not apply to machinery and tools used in generating renewable energy by qualifying co-generator or qualifying small power producer under Public Utility Regulatory Policies Act (PURPA), unless the rate of tax under this section would result in a lower property tax on such machinery and tools.*

2016 amendment can be found here.

Under Chapter 26 (§ 58.1-2600 et seq.) of the Code of Virginia certain tangible personal property of public utilities is required to be taxed at the local real estate tax. Given that the local real estate tax rate generally is the lowest property tax rate imposed in many localities, HB 1297 avoids the situation in which a locality elects a lower machinery and tools tax rate, which exceeds the locality’s real estate tax rate, and applies the new machinery and tools tax rate to tangible personal property ordinarily taxed at the locality’s real estate tax rate under Chapter 26. This is why the bill specifies that the new machinery and tools tax rate on property used in producing or generating renewable energy does not apply to such property if the lower real estate tax rate is already being imposed.

Authorities

Legislation Details - H 1297
Name H 1297
Date Enacted 03/17/2015

Contact

Organization:
Virginia Department of Taxation
Address:
Post Office Box 1115
Richmond, VA 23218
Phone:
(804) 367-8031