Large solar systems would pay an annual local capacity tax

Eligible renewable-energy equipment and systems receive a property-tax exemption. The provisions cover certain Class I renewable energy sources, hydropower facilities, solar heating systems, geothermal resources, and photovoltaic equipment used at homes, farms, commercial sites, or industrial sites. Home and farm systems must meet limits on installation date, expected production, local energy use, and property type. Commercial and industrial systems must meet limits on installation date, capacity, location, and purpose. Applicants generally must file a written exemption application with the local assessor by November 1 of the assessment year. A later alteration requiring a building permit requires a new application before the exemption can continue. The listed exemption rules apply on the assessment-year dates stated in the provisions, including dates beginning October 1, 2025; Section 1 is effective from passage.

Owners of covered solar photovoltaic systems must pay an annual capacity-based tax to each municipality where the system is located. The tax covers photovoltaic systems larger than one megawatt whose capacity exceeds the location's load and whose owners receive permission to operate from an electric utility. The tax is $10,000 per megawatt, including fractional capacity, for the applicable tax period. The tax does not apply to systems on state-owned land, brownfields, landfills, residential, commercial, or industrial rooftops, solar canopies, or systems serving a critical-facility microgrid. A municipality may enter an agreement to freeze or stabilize the tax for a system owner. Owners must notify each affected municipality within seven days after receiving permission to operate; systems approved between July 1, 2025, and June 30, 2026, must be reported by July 10, 2026. For tax years beginning July 1, 2026, the tax lasts 19 years for systems approved from July 1, 2025, through June 30, 2026, and 20 years for systems approved on or after July 1, 2026.

Municipalities collect the solar capacity tax and may use the resulting revenue as general municipal revenue. The rules apply to each municipality receiving tax from a covered system, including systems located across municipal boundaries. Municipalities may require one annual payment or installments. Unpaid amounts accrue interest at 1.5 percent per month or fraction of a month. An owner may appeal to Superior Court and avoid interest on a disputed portion by paying at least 75 percent under protest within the required time. A system spanning multiple municipalities is allocated according to the capacity located in each municipality. The tax is due on the dates set by the municipal finance department or tax collector and is collected like other property taxes.