Local Option - Property Tax Exemption for Renewable Energy Facilities
Administered by Alabama Department of Revenue
Alabama's property tax exemption allows you to reduce or eliminate property taxes on renewable energy facilities (solar, wind, biomass, geothermal, and others) for up to 20 years, with the actual tax savings determined annually based on your facility's assessed value. To apply, contact your local county, municipality, or public industrial authority before placing your system in service to request a cost/benefit analysis and exemption agreement.
This program creates customer value by reducing long-term operating costs through property tax abatement on qualifying renewable installations, making projects more financially attractive. You should advise clients to initiate the exemption application with their local government authority before system installation, since the abatement must be granted prior to the facility becoming operational; the exemption covers state, county, and municipal taxes and can extend up to 20 years with local and state approvals.
The program operates through local governing bodies (counties, municipalities, public industrial authorities) that evaluate proposed facilities via cost/benefit analysis and grant abatements of 10 years (renewable for an additional 10 years) on property tax for eligible renewable energy assets. Eligibility encompasses solar PV, wind, biomass, anaerobic digestion, geothermal, tidal, and municipal solid waste systems across residential, commercial, industrial, and agricultural sectors, but excludes hydropower; the Alabama Department of Revenue oversees tax administration while county assessors determine annual property values and resulting tax abatement amounts.
Program details
- Program ID
- 5943
- Expires
- 7/31/2028
- Last updated
- 1/2/2026
Eligibility
- Sectors
- commercial industrial residential agricultural appliance manufacturers
- Technologies
- solar photovoltaics wind (all) biomass municipal solid waste tidal geothermal direct-use anaerobic digestion
Program summary
The State of Alabama provides abatement of property tax for qualifying renewable energy facilities in the state. Only the noneducational portion of the property tax can be abated.
Eligibility:
The Renewable Energy Facility is defined as any plant, property, or property that either produces electricity from biofuels, or from renewable energy resources, including wind, biomass, black liquor, tidal or ocean current, geothermal, solar energy, small irrigation, municipal solid waste, and hydrogen when derived or produced from some other renewable energy resource. Hydropower is exempted from the definition of an eligible resource.
Program Description:
The abatement of the property taxes is based on the market value of specific assets; therefore, the actual amount of taxes abated is determined each year as the property is assessed and valued. Although the Department of Revenue oversees the administration of property taxes, the county tax assessors and collectors are responsible for assessing the property and collecting the property tax.
The local governing body i.e.- municipality, county, or a public industrial authority- may grant property tax abatement of all the states and local taxes for a period of 10 years, however, it can be extended for another period of 10 years (maximum of total 20 years) through additional approval by the appropriate granting authority i.e. county tax abated only with consent by resolution of the governing body of the county; municipal tax abated only with consent by resolution of the governing body of the municipality; and State tax abated only with the consent of the Governor. The abatement granted can be incorporated under one agreement. The property tax abatement must be granted prior to placing the facility in service, no additional property tax may be eligible for abatement once the project is placed in service.
Interested applicants for the property tax abatement may apply to the governing body of the municipality, county, or public industrial authority depending on where the facility is situated. The government authority will perform a cost/benefit analysis of the proposed development to determine the maximum exemption period for the abatement of the property tax.
Contact & resources
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
