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Bill Summary · HB 131

Summary — HB 131: Reenact Solar Energy Tax Credit

Status: Reenacts prior statute (G.S. 105‑129.16A) — restores the State solar/renewable energy investment tax credit as it existed immediately before its prior expiration. (Introduced Feb 13, 2025; referred to committee. See statute for final effective date once enacted.)

Main purpose

To reinstate a North Carolina income tax credit for taxpayers that construct, purchase, or lease qualifying solar energy equipment (and certain other renewable energy property), thereby restoring a financial incentive to promote on‑site renewable energy installations.

Key provisions

  • Credit amount: A credit equal to 35% of the cost of qualifying solar energy equipment placed in service in North Carolina during the taxable year.
  • Treatment by use:
    • Nonbusiness purpose (primarily residential): the full credit is taken in the taxable year the equipment is placed in service.
    • Business purpose: the credit for most property (other than strictly nonbusiness uses) must be taken in five equal annual installments beginning with the year the equipment is placed in service.
  • Leasing: If equipment is leased, a lessee may request a written statement from the lessor describing the equipment and stating its cost.
  • Public funds exclusion: No credit is allowed to the extent the equipment cost was provided by public funds; however, “public funds” is defined to exclude grants under section 1603 of the federal American Recovery and Reinvestment Tax Act of 2009.
  • Credit ceilings (per installation):
    • Business installations: $2,500,000
    • Nonbusiness (residential and similar): specified ceilings, e.g. $1,400 per dwelling unit for solar domestic water heating; $3,500 per dwelling unit for active space heating/combined systems; $10,500 for “other” renewable property; geothermal example shown at $8,400.
    • Eco‑Industrial Park (certified): $5,000,000 per installation for business purposes.
  • No double-dipping: Taxpayers claiming other state credits under the same chapter for the same property may not also take this credit.
  • Disposition rule: If the equipment is disposed of, taken out of service, or moved out of state in a year when remaining installments would accrue, remaining installments expire (limited carryforward rules may apply).
  • Definitions: “Qualifying solar energy equipment” is referenced to the statutory definition in G.S. 105‑129.15(7)e.

Who is affected

  • Homeowners and residential taxpayers who install qualifying solar equipment.
  • Businesses and developers that install solar (or other qualifying renewable) systems — including eco‑industrial parks.
  • Lessors of solar equipment (supports leased systems documentation requirements).
  • Solar industry: installers, contractors, and financiers (demand and financing may respond to the credit).
  • North Carolina Department of Revenue (tax administration, certification, auditing).

Potential impacts

  • Policy objective: increase adoption of on‑site solar/renewable energy by lowering net project cost.
  • Fiscal: likely reduces State income tax revenue relative to no‑credit baseline; revenue impact depends on uptake, project sizes, and ceilings. (No fiscal note included here — consult the bill’s fiscal analysis for estimates.)
  • Administrative: requires tax administration to process installment credits, enforce ceilings, and track dispositions.

Procedural/timeline notes

  • The bill text reenacts G.S. 105‑129.16A “as it existed immediately before its expiration.” Confirm the bill’s enacted effective date and any transition rules in the final enrolled act.
  • Installment and sunset/expiration language in the reenacted statute includes rules governing eligibility and expiration of remaining installments when property is removed or disposed.

For exact statutory language, definitions (e.g., the statutory definition of “qualifying solar energy equipment”), and any amendments or effective date, consult the enacted bill text and the Office of State Legislative Counsel or Department of Revenue guidance once the bill is final.

Compiled from official sources — confirm details with the bill’s official record.

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