Congress Extends Federal Renewable Energy Tax Credits
On December 18, 2015, President Obama signed H.R. 2029, the Consolidated Appropriations Act, 2016, and the Protecting Americans from Tax Hikes Act of 2015 (the “Act”), into law. The $1.8 trillion measure funds the federal government through September 2016, and extends numerous federal tax credits, including the renewable energy production tax credit (PTC) and investment tax credit (ITC).
The PTC provides an inflation-adjusted 2.3 cent per-kilowatt-hour (kWh) credit against federal income tax for electricity generated by qualified energy resources, including wind, biomass, and landfill gas. The PTC, which expired on January 1, 2015, was extended until January 1, 2020. The Act also reduces the amount of the PTC by 20 percent for facilities that begin construction in 2017, 40 percent for facilities that begin construction in 2018, and 60 percent for facilities that begin construction in 2019.
The ITC provides credit against federal income tax equal to 30 percent of investments in commercial and residential solar systems. The Act extended the ITC until January 1, 2022. The Act also reduces the amount of the ITC from 30 percent to 26 percent for facilities that begin construction in 2020, to 22 percent for facilities that begin construction in 2021, and to 10 percent for facilities that begin construction before January 1, 2022, but are not in service before January 1, 2024.
The Nebraska Legislature, which convenes January 6, 2016, will consider enactment of a state PTC and ITC. Legislative bill 423 proposes a 0.75 cent per kWh PTC and a 30 percent ITC for electricity produced by certain renewable energy facilities, including wind and solar facilities. LB 423 is now on Select File, the second-to-last round of debate in the Nebraska Legislature.