Last DSIRE Review: 02/19/2009   Incentive Type: Personal Tax Credit State: Federal Eligible Renewable/Other Technologies: Solar Water Heat, Photovoltaics, Wind, Fuel Cells, Geothermal Heat Pumps, Other Solar Electric Technologies Applicable Sectors: Residential Amount:30% Maximum Incentive:Solar-electric systems placed in service before 1/1/2009: $2,000
Solar-electric systems placed in service after 12/31/2008: no maximum
Solar water heaters placed in service before 1/1/2009: $2,000
Solar water heaters placed in service after 12/31/2008: no maximum
Wind turbines placed in service in 2008: $4,000
Wind turbines placed in service after 12/31/2008: no maximum
Geothermal heat pumps placed in service in 2008: $2,000
Geothermal heat pumps placed in service after 12/31/2008: no maximum
Fuel cells: $500 per 0.5 kW
Carryover Provisions:Excess credit may be carried forward to succeeding tax year Eligible System Size:Fuel cells: 0.5 kW minimum
Equipment/Installation Requirements:Solar water heating property must be certified by SRCC or by comparable entity endorsed by the state in which the system is installed. At least half the energy used to heat the dwelling's water must be from solar. Geothermal heat pumps must meet federal Energy Star requirements. Fuel cells must have electricity-only generation efficiency greater than 30%. Authority 1: 26 USC § 25D Date Enacted:8/8/2005 (subsequently amended) Date Effective:1/1/2006 Expiration Date:12/31/2016 Authority 2: IRS Form 5695 & Instructions: Residential Energy Credits

Summary:
Note: The American Recovery and Reinvestment Act of 2009 does not allow taxpayers eligible for the residential renewable energy tax credit to receive a U.S. Treasury Department grant instead of taking this credit.  
 
Established by the federal Energy Policy Act of 2005, the federal tax credit for residential energy property initially applied to solar-electric systems, solar water heating systems and fuel cells. The Energy Improvement and Extension Act of 2008 (H.R. 1424) extended the tax credit to small wind-energy systems and geothermal heat pumps, effective January 1, 2008. Other key revisions included an eight-year extension of the credit to December 31, 2016, the ability to take the credit against the alternative minimum tax, and the removal of the $2,000 credit limit for solar-electric systems beginning in 2009. The credit was further enhanced in February 2009 by The American Recovery and Reinvestment Act of 2009 (H.R. 1: Div. B, Sec. 1122, p. 46), which removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.

A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States and used as a residence by the taxpayer. Expenditures with respect to the equipment are treated as made when the installation is completed. If the installation is on a new home, the "placed in service" date is the date of occupancy by the homeowner. Expenditures include labor costs for onsite preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit can be carried forward until 2016, but it is unclear whether the unused tax credit can be carried forward after then. The maximum allowable credit, equipment requirements and other details vary by technology, as outlined below.
 
 
Solar-electric property

• There is no maximum credit for systems placed in service after 2008. The maximum credit is $2,000 for systems placed in service before January 1, 2009.  
  
• Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2016.  
  
• The home served by the system does not have to be the taxpayer’s principal residence.  
  
• Note that the Solar Energy Industries Association (SEIA) has published a three-page document that provides answers to frequently asked questions regarding the federal tax credits for solar energy.

 
Solar water-heating property

• There is no maximum credit for systems placed in service after 2008. The maximum credit is $2,000 for systems placed in service before January 1, 2009.  
  
• Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2016.  
  
• Equipment must be certified for performance by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed.  
  
• At least half the energy used to heat the dwelling's water must be from solar in order for the solar water-heating property expenditures to be eligible.  
  
• The tax credit does not apply to solar water-heating property for swimming pools or hot tubs.  
  
• The home served by the system does not have to be the taxpayer’s principal residence.  
  
• Note that the Solar Energy Industries Association (SEIA) has published a three-page document that provides answers to frequently asked questions regarding the federal tax credits for solar energy.

 
Fuel cell property

• The maximum credit is $500 per half kilowatt (kW).  
  
• Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2016.  
  
• The fuel cell must have a nameplate capacity of at least 0.5 kW of electricity using an electrochemical process and an electricity-only generation efficiency greater than 30%.  
  
• In case of joint occupancy, the maximum qualifying costs that can be taken into account by all occupants for figuring the credit is $1,667 per half kilowatt. This does not apply to married individuals filing a joint return. The credit that may be claimed by each individual is proportional to the costs he or she paid.  
  
• The home served by the system must be the taxpayer’s principal residence.

 
Small wind-energy property

• There is no maximum credit for systems placed in service after 2008. The maximum credit is $500 per half kilowatt, not to exceed $4,000, for systems placed in service in 2008.  
  
• Systems must be placed in service on or after January 1, 2008, and on or before December 31, 2016.  
  
• The home served by the system does not have to be the taxpayer’s principal residence.

 
Geothermal heat pumps

• There is no maximum credit for systems placed in service after 2008. The maximum credit is $2,000 for systems placed in service in 2008.  
  
• Systems must be placed in service on or after January 1, 2008, and on or before December 31, 2016.  
  
• The geothermal heat pump must meet federal Energy Star program requirements in effect at the time the installation is completed.  
  
• The home served by the system does not have to be the taxpayer’s principal residence.

 
 
Significantly, The American Recovery and Reinvestment Act of 2009 repealed a previous limitation on the use of the credit for eligible projects also supported by "subsidized energy financing." For projects placed in service after December 31, 2008, this limitation no longer applies.  
 
 
History  
The federal Energy Policy Act of 2005 established a 30% tax credit (up to $2,000) for the purchase and installation of residential solar electric and solar water heating property and a 30% tax credit (up to $500 per 0.5 kilowatt) for fuel cells. Initially scheduled to expire at the end of 2007, the tax credits were extended through December 31, 2008, by the Tax Relief and Health Care Act of 2006.  
 
In October 2008, the Energy Improvement and Extension Act of 2008 extended the tax credits once again (until December 31, 2016), and a new tax credit for small wind-energy systems and geothermal heat pump systems was created. In February 2009, The American Recovery and Reinvestment Act of 2009 removed the maximum credit amount for all eligible technologies (except fuel cells) placed in service after 2008.

  Contact:   Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov

Summary:
Louisiana provides a tax credit for the purchase and installation of solar and wind energy systems purchased and installed on or after January 1, 2008. The credit may be applied to personal, corporate or franchise taxes, depending on the entity which purchases and installs the system, but the system must be installed at either a residence or a residential rental apartment complex to be eligible. HB 858, enacted in July 2009, extended the tax credit to taxpayers that purchase and install systems rather than only the owners of the residential property. This legislation also clarifies that only one credit can be taken per system, so if the property is sold, the taxpayer who originally claimed the credit must disclose this, as the new owner will not be eligible for another tax credit on the same system.  
 
The tax credit may be applied both to solar-electric systems (photovoltaic systems) and solar-thermal systems, when the energy is used for space heating, space cooling or water heating. The amount of the credit is equal to 50% of the first $25,000 of the cost of each system, including installation costs (unless the taxpayer is installing the system). The credit must be fully claimed in the taxable year in which the system is installed and placed in service, or the year in which the residential property is sold if the system is installed on a new home or apartment building. Any excess credit which exceeds the taxpayer's liabilities for that year shall be treated as an overpayment, and the Louisiana Department of Revenue will issue a refund for the remaining amount within one year of receiving the claim.  
 
For photovoltaic (PV) systems, the tax credit applies to AC or DC generation systems which are grid-connected, net-metered systems (with or without battery backup) or stand-alone systems. Eligible wind energy systems include AC or DC electric generation and mechanical wind systems. Solar thermal systems must be used for the primary purpose of heating water (including pool heating), space heating or space cooling.  
 
Electrical equipment must be UL-listed and installed in compliance with all applicable building and electrical codes. Solar thermal equipment must be SRCC-certified and installed in compliance with all applicable building and plumbing codes. Installations must be performed by a licensed contractor, the owner of the residence, or by a person who has received certification by a technical college in the installation of such systems. In order to claim a tax credit for a wind or solar energy system all components must be installed at the same time as the system.  
 
This tax credit may be combined with any federal tax incentive, but it may not be combined with any other state tax incentive. Whenever additional incentives such as cash rebates, prizes or gift certificates are offered in addition to the tax credit, the eligible cost must be reduced by the value of the incentive received.