Wind and Solar-Electric (PV) Systems Exemption
In Minnesota, the equipment of your wind or solar electric system is exempt from property tax, so adding one should not raise your property tax bill, though the land under it is still taxed as usual. Small systems qualify for the most relief: wind systems under 250 kW and solar systems of 1 MW (AC) or less are exempt from the production tax. No application is described, so check with your county assessor or the Minnesota Department of Revenue to confirm how the exemption applies to you.
You can tell customers that wind energy system property (except land) and solar energy generating system personal property (beginning with taxes payable in 2015) are exempt from Minnesota property tax, which lowers the long-term cost of ownership. Wind systems under 250 kW and solar systems of 1 MW (AC) or less owe no production tax, while larger projects pay a per-kWh wind rate or a $1.20/MWh solar rate. Owners of solar systems over 1 MW (AC) must file an annual report with the commissioner of revenue by January 15, and local governments may negotiate alternative wind arrangements for public infrastructure and services.
This is a property tax exemption with production taxes replacing property tax on large systems: wind pays $0.0012/kWh above 12 MW, $0.00036/kWh for 2-12 MW, and $0.00012/kWh for 0.25-2 MW, and solar over 1 MW (AC) pays $1.20/MWh. Revenue from both production taxes is split 80% to counties and 20% to cities and townships, and solar owners file annually by January 15 with the commissioner of revenue notifying them of tax due by February 28. The program covers residential, commercial, and industrial owners of wind and PV, with exemptions for small systems, political subdivision systems of 2 MW or less, and job opportunity building zones, and aggregated solar over 1 MW on the same or adjacent parcels is taxed as Class 3a.
Program details
- Program ID
- 151
- Last updated
- 10/8/2025
Eligibility
- Sectors
- commercial industrial residential
- Technologies
- solar photovoltaics wind (all) wind (small)
Program summary
All real and personal property of wind energy systems are exempt from the state's property tax, except for the land on which the wind energy system is located. Under H.B. 3167, beginning with taxes payable in 2015, personal property consisting of solar energy generating systems is exempt from property taxation, but the real property (i.e., the land on which the solar energy generating system is located) is still subject to property tax. Wind and solar energy production taxes have replaced more typical forms of property tax.
Wind
In lieu of a property tax on large wind-energy electricity generating systems, a production tax was implemented in 2002 for systems installed after January 1, 1991. The production tax for electricity generated by wind is:
- $0.0012 per kilowatt-hour (kWh) for systems greater than 12 megawatts (MW) nameplate capacity,
- $0.00036 per kWh for systems between 2 MW and 12 MW nameplate capacity, and
- $0.00012 per kWh for systems between 0.25 MW and 2 MW nameplate capacity.
Wind systems less than 250 kW are exempt from the production tax, as are systems with a capacity of 2 MW or less that are owned by political subdivisions and systems located in a designated job opportunity building zone. The wind energy production tax is considered to be a personal property tax.
For 2006 - 2009 (Minn. Stat. § 272.029 Subd. 6), the revenue generated by the production tax was required to be distributed to local taxing districts as follows: 80% to counties; 14% to cities and townships; and 6% to school districts. For 2010 and thereafter, the distribution of revenues is set at 80% to counties and 20% to cities and townships. For further details, please see the Minnesota Department of Revenue's Property Tax Administrators' Manual.
Notably, a provision in a separate statute (Minn. Stat. § 272.028) allows a mutually agreeable alternative to be negotiated between the local government authority and the wind facility owner for the purpose of maintaining "public infrastructure and services." For example, a lower tax might be negotiated by a local government in order to attract wind development.
Solar
In lieu of a property tax on large solar energy generating systems, a production tax is set beginning with taxes payable in 2015. The production tax for electricity generated by solar is $1.20 per megawatt-hour (MWh) for systems exceeding 1 MW (AC); systems 1 MW (AC) or less are exempt from the production tax. The solar energy production tax is considered to be a personal property tax.
Aggregated generation systems with over 1 MW of capacity on the same or adjacent parcels is classified as tax Class 3a, "Preferred Commercial," paying 1.5% on the first $150,000 of value and 2% on all additional valuation.
The owner of applicable solar energy generating systems must file a report with the commissioner of revenue on or before January 15 annually; on or before February 28, the commissioner of revenue must notify the owner of the tax due to each county for the current year.
The distribution of revenues is set at 80% to counties and 20% to cities and townships.
Contact & resources
- Contact email
- rory.artig@state.mn.us
Please verify current program details with the administering agency before making any financial decisions.
