In 2013, the Louisiana Legislation in its Regular Session passed Act 428. Act 428 amended and repealed portions of the Solar Energy System Tax Credit, which was originally enacted in 2007 (as the Wind or Solar Energy System Tax Credit)1. The statue is to give individuals and companies the ability to receive a tax credit when installing an alternative energy source. Act 428 significantly restricted the ability for an individual or corporation to claim tax credits for installing alternative energy systems. The amended Act became effective in July of 2013, but has phase-out dates over the next four (4) years, eventually ending on January 1, 2018.
First, the 2013 Legislative body removed the ability to claim any wind energy installation as a tax credit. Only two types of solar systems may now qualify: solar electric systems and solar thermal systems, or any combination of components thereof. Solar electrical systems must have the primary purpose of converting sunlight into electrical energy; whereas solar thermal systems convert sunlight into thermal energy, for the purpose of heating water, space, or space cooling.
Second, Act 428 repealed the ability to claim the credit for installations in residential apartment complexes, and only allows the credit for single-family homes in Louisiana. A single family home in turn is defined as a detached dwelling. The Act also limits each residence to one credit, including prior-claims under the statute.
Third, all components of the systems installed must be compliant with the American Recovery and Reinvestment Act of 2009 (ARRA)2. The ARRA requires all the iron, steel, and manufactured goods used as construction materials to be manufactured in the United States or one of the countries that the United States has an international agreement with. However, the ARRA also primarily applies to public buildings or public works, which have an estimated value of $7,804,000 or more. Considering the difficulty of most solar projects to meet these criteria the Louisiana Department of Revenue has read the amendment to the Solar Energy Systems Tax Credit to require that all parts installed must be manufactured or produced within the United States, or be one of the countries the United States has entered into an international agreement3. Additionally, all energy systems must be installed by a contractor who is licensed by the Louisiana State Licensing Board for Contractors.
Finally, regarding leased systems, the credits allowed to be claimed has been reduced and will continue to be reduced as the phase-outs continue. For systems installed after January 1, 2014 and before January 1 2018, the credits are limited to 38% of the first $25,000 of the purchase. However, before July 1, 2014, no system is allowed to cost more than $4.50 per watt and provide no more than six (6) kilowatts of energy. From July 1, 2014 to July 1, 2015, the system shall cost no more than $3.50 per watt, and provide no more than six kilowatts of energy. Finally, any installation after July 1, 2015 shall cost no more than $2 per watt and provide for no more than six kilowatts of energy. Essentially, the maximum credits one can receive is $9,500 until July 1, 2014; $7,980 from July 1, 2014 to July 1, 2015, and after that, a maximum of $4,560.
1 LA R.S. 47:6030 (2013); LA R.S. 47:6030(B)(1)-(2) (2013); LA R.S. 47:6030 (C)(3)-(4) (2013); LA R.S. 47:6030(A)(1) (2013).
2 Pub. L. 111-5, 123 Stat. 115. Feb 17, 2009.
3 Revenue Information Bulletin No. 13-013, Louisiana Department of Revenue (July 1, 2013), available at https://www.rev.state.la.us/forms/lawspolicies/RIB%2013-013.pdf; LA R.S. 47:6030(A)(1) (2013); LA R.S. 47:6030(B)(2)(b)(ii).