Alternative Energy Investment Tax Credit

Alternative energy investments of $5,000 or more are eligible for a tax credit of up to 35 percent against individual or corporate tax on income generated by the investment. The tax credit must be taken the year the equipment is placed in service; however, any portion of the tax credit that exceeds the amount of tax to be paid may be carried over and applied against state tax liability for the following 7 years. A project on a reservation 5 megawatts (MW) or larger may carry the credit over for 15 years, if it has an employment agreement with the tribal government.

The credit may only be taken against net income produced by the eligible equipment or by associated new business activity, that is, it must be a commercial operation. Associated facilities, manufacturing plants producing the alternative energy equipment and industries using the energy generated may use the tax credit. Taxpayers may not take this credit in conjunction with any other state energy or state investment tax benefits, or with the property tax exemption for nonfossil energy property. This credit is available to taxpayers purchasing an existing facility as well as to those building a new facility.