Solar: 100% exemption from real property taxes
Wind: 100% exemption from real and personal property taxes
In lieu of a property tax on large wind-energy electricity generating systems, a production tax was implemented in 2002 for systems installed after January 1, 1991. The production tax for electricity generated by wind is:
- $0.0012 per kilowatt-hour (kWh) for systems greater than 12 megawatts (MW) nameplate capacity,
- $0.00036 per kWh for systems between 2 MW and 12 MW nameplate capacity, and
- $0.00012 per kWh for systems between 0.25 MW and 2 MW nameplate capacity.
Wind systems less than 250 kW are exempt from the production tax, as are systems with a capacity of 2 MW or less that are owned by political subdivisions and systems located in a designated job opportunity building zone. The wind energy production tax is considered to be a personal property tax.
For 2006 - 2009 (Minn. Stat. § 272.029 Subd. 6), the revenue generated by the production tax was required to be distributed to local taxing districts as follows: 80% to counties; 14% to cities and townships; and 6% to school districts. For 2010 and thereafter, the distribution of revenues is set at 80% to counties and 20% to cities and townships. For further details, please see the Minnesota Department of Revenue's Property Tax Administrators' Manual.
Notably, a provision in a separate statute (Minn. Stat. § 272.028) allows a mutually agreeable alternative to be negotiated between the local government authority and the wind facility owner for the purpose of maintaining "public infrastructure and services." For example, a lower tax might be negotiated by a local government in order to attract wind development.
In lieu of a property tax on large solar energy generating systems, a production tax is set beginning with taxes payable in 2015. The production tax for electricity generated by solar is $1.20 per megawatt-hour (MWh) for systems exceeding 1 MW (AC); systems 1 MW (AC) or less are exempt from the production tax. The solar energy production tax is considered to be a personal property tax.
The owner of applicable solar energy generating systems must file a report with the commissioner of revenue on or before January 15 annually; on or before February 28, the commissioner of revenue must notify the owner of the tax due to each county for the current year.
The distribution of revenues is set at 80% to counties and 20% to cities and townships.