Wind projects may not benefit from state tax incentives

Wind projects may not benefit from state tax incentives | Norton Rose Fulbright

December 01, 2000 | By Keith Martin in Washington, DC
WIND PROJECTS may not benefit from state tax incentives.

The US government offers a tax credit of 1.7 cents a kilowatt hour for generating electricity from wind. The credit is in section 45 of the US tax code. However, it cannot be claimed to the extent the project benefits from other government subsidies, including “any other credit allowable with respect to any property which is part of the project.” Some states either have or are considering adopting tax credits like the one at the federal level to reward electricity production from wind. The IRS national office takes the position that the federal credit will not apply to the extent states adopt these credits.

There is a good argument the IRS is wrong. The examples of other credits that Congress cited in 1992 when it adopted the federal wind credit were tax credits that subsidize the capital cost of a project – not credits that reward output. Rep. Bob Filner (D.-Calif.) has introduced a bill in the House to clarify the situation, but Filner is not on the right committee to advance the bill. Wind groups need to find another sponsor.

Keith Martin