Renewable Energy Property Tax Exemption

Massachusetts law provides that solar energy systems and wind energy systems or solar and wind systems that are co-located with an energy storage system that meet the following criteria are exempt from local property tax for a 20-year period: can produce at most 125% of the annual electricity needs of the real property; has a system capacity that is 25 kW or less; or an individual system -- or a combination therein -- that entered into an agreement for payment in lieu of taxes associated with the municipality that the system is located in. A period greater than 20 years may be allowed upon a written agreement between the municipality and the owner of the solar or wind energy system.* Solar, wind, or energy systems owned by a distribution or electric company are not included in the exemption. 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. Qualified fuel cell-powered systems built after January 1, 2020, capable of producing -- without combustion -- not more than 125% of the annual energy needs for the real property, are also tax exempt. Fuel cells must be utilized as the primary or auxiliary power system for the real property. 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. See the Division of Local Services Information Guideline Release 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.