HB 23 – Income Tax Modifications, sponsored by Utah Representative Jeremy Peterson (R– Ogden), has successfully passed out of a joint Revenue and Tax Interim Committee hearing with a vote of 12-5, according to a December 18 report by Utah Political Capitol.
The bill originally was presented to the committee with the working title, “Utah Solar Tax Credit Repeal Hearing,” which is more aptly descriptive, according to the news outlet – because this measure seeks to amend, and ultimately to phase out, the personal state income tax credit for Utah residents who purchase rooftop solar. The goal would be to promote a more competitive solar industry in the Beehive State.
The pending legislation would phase out the state’s individual income tax credit for residential solar system purchasers and it would cap the maximum individual income tax credit allowed for residential solar rooftop energy systems installed within the state, Utah Political Capitol said..
To contain the impact of the increasingly popular solar tax incentive, the bill creates a moratorium that limits the state’s budget impact to between $20 million and $30 million for 2017.
Utah’s present solar tax credit is set at $2,000 – or 25 percent of the cost of a specific system – (whichever is less) for new residential rooftop interconnections. As a tax credit, the amount reduces the individual’s entire state tax liability. Currently, there are no limits or caps to the program, which has become increasingly popular in the state.
Ryan Evans, president of the Utah Energy Association, points out that this existing tax incentive is unique, the newspaper said. “For every $20 million Utah invests in homeowners,” he said, “it results in more than $300 million in economic activity for our state. For every $2,000 Utah credits residents on their income tax, it generates an immediate return of approximately $1,000 in sales taxes to the state and local economies.
“Add in sales and property taxes paid on equipment and tools to support thousands of employees, corporate income taxes paid by solar companies and income taxes from new jobs created, and it is apparent the state recoups its initial $2,000 back, perhaps even,” Evans commented.
According to Evans, in 2016 there were between 12,000 and 16,000 solar installations in Utah – corresponding to $315 million total economic activity for residential solar installations alone with $800-$1,200 in sales and use taxes generated per system.
Alan Naumann, senior partner for solar marketing company, Powur, told the news outlet, “It’s foolish to stomp on the feet of this industry. It’s the fastest growing industry in the state and it is financed by outside money, bringing a tremendous amount of revenue to Utah.”