Note: $1,157,468 in 2015 Solar Energy System Tax Credits had been awarded through May 15, 2015. An additional $1,816,406 of tax credits have been requested on applications received through April 29, 2015.
Iowa offers an 18% individual tax credit for solar energy systems. Specifically, the law allows individuals to claim a state tax credit worth 60% of the Federal Residential Tax Credit, which is set at 30% of installed costs (60% * 30% = 18%). Each taxpayer may claim up to $5,000 for residential systems and $20,000 for commercial systems under this program, and any excess credits may be carried over for up to 10 years. Beginning in 2017, the Iowa tax credit for solar energy systems will fall to 5% for commercial systems (i.e., 50% the Federal Tax Credit amount of 10%); residential systems will no longer be eligible for a tax credit.
An individual may claim the tax credit allowed an LLC, S corporation, trust, estate, or partnership that elects to have the income taxed directly to the individual. The amount that the individual can claim is based upon the share of the individual’s earnings of the corporate entity.
A taxpayer may claim a credit for each separate and distinct solar installation. The cumulative value of the tax credits claimed by applicants under this program and the corporate tax credit is limited to $5,000,000 per year, with a minimum of $1,000,000 reserved for credits for residential solar installations. Because of this limit, a taxpayer must complete an application for each separate and distinct solar installation to reserve the tax credit. The application for the Iowa credit cannot be made for individuals until the installation of the solar energy system is complete. An application for the Iowa credit for businesses cannot be made until the installation of the solar system is complete and the system is placed in service. Credits will be reserved on a first-come, first-serve basis.
Taxpayers taking a credit under this provision cannot claim a credit under the Iowa Production Tax Credit.