Property Tax Assessment for Renewable Energy Equipment

Last updated: August 28, 2018

Program Overview

Implementing Sector:State
Category:Financial Incentive
State:Arizona
Incentive Type:Property Tax Incentive
Administrator:Arizona Department of Revenue
Expiration Date:12/31/2040
Eligible Renewable/Other Technologies:Solar Thermal Electric, Solar Photovoltaics, Wind (All), Biomass, Hydroelectric

Authorities

Name:A.R.S. § 42-14155
Date Enacted:4/10/2000 (subsequently amended)
Expiration Date:12/31/2040

Summary

For the purpose of determining property tax, renewable energy equipment owned by utilities and other entities operating in Arizona is assessed at 20% of the "taxable original cost" after deducting depreciation. "Renewable energy equipment" is defined as "electric generation facilities, electric transmission, electric distribution, gas distribution or combination gas and electric transmission and distribution and transmission and distribution cooperative property that is located in this state, that is used or useful for the generation, storage, transmission or distribution of electric power, energy or fuel derived from solar, wind or other nonpetroleum renewable sources not intended for self-consumption, including materials and supplies and construction work in progress, but excluding licensed vehicles and property valued under sections 42-14154 and 42-14156."

H.B. 2403 of 2014 clarified that depreciation should be determined using straight-line depreciation over the useful life of the equipment. The taxable original cost equals the original cost of the equipment, reduced by any investment tax credits, production tax credits, or grants in lieu of investment tax credits.

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