Renewable Energy Property Tax Exemption

Massachusetts law provides that solar energy systems and wind energy systems used as a primary or auxiliary power system for the purpose of heating or otherwise supplying the energy needs of taxable property are exempt from local property tax for a 20-year period.* Hydropower facilities are also exempt from local property tax for a 20-year period if a system owner enters into an agreement with the city or town to make a payment (in lieu of taxes) of at least 5% of its gross income in the preceding calendar year.

This incentive applies only to the value added to a property by an eligible system. It does not constitute an exemption for the full amount of the property tax bill.

Any components of the energy system that serve dual purposes (for example: structural and energy) are not eligible for the exemption. For instance, windows, thermal drapes and floors are not eligible for the exemption. However, thermal storage rods, storage boxes, fan systems, and duct work that function exclusively as part of the energy system are eligible for the exemption.

Solar and wind facilities that generate electricity to sell to the grid may be eligible for a Tax Increment Financing exemption agreement if they are located in an Economic Opportunity or Economic Target Area as designated by the Economic Advisory Coordinating Council. Facilities owned by electric generation or wholesale generation companies may be eligible for a payment in lieu of tax agreement. See the Department of Revenue's Information Sheet to learn more.

 * Massachusetts' property tax exemption statute includes language that may be interpreted differently from county to county. Check with your county's tax assessors to learn how this exemption is interpreted in your county.