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Community Solar Energy Generating Systems Exempt from Maryland Municipal Personal Property Taxes

Last month, Maryland Governor Larry Hogan signed House Bill 76 into law, thereby exempting certain community solar energy systems from personal property taxes. The new law, entitled Community Solar Energy Generating Systems – Exemption from Property Taxes, was made effective June 1, 2022, and allows for community solar development without any county or municipal corporation personal property taxes if it meets specific criteria.

To be eligible, the solar project must:

  1. Not exceed two megawatts as measured by the alternating current rating of the system’s inverter.
  2. Provide 50% of the energy it produces to low-to-moderate-income customers at a cost that is at least 20% less than the amount charged by the area’s electric company serving the area where the system is located.
  3. Be located/installed on a rooftop, parking facility, or brownfield.

The personal property that receives the exemption under these criteria is exempt from county or municipal corporation property tax for each taxable year in which the property continues to meet the requirements as stated above. A County or Municipal Corporation Supervisor may not accept an application from a property owner for the exemption after December 31st, 2024.

The law also requires the State Department of Assessments and Taxation to report annually on the number and location of projects that, in the immediately preceding taxable year, have received the exemption to the Senate Budget and Taxation Committee and the House Ways and Means Committee.

At LaBella, we have a deep understanding of the importance that state legislation holds on solar development and how it can impact our clients in profound ways. Our experience touches on both the public funding collaboration & incentive layering as well as solar development on underutilized sites like brownfields and landfills. Perhaps the most notable factor about this new law is the impact it will have on small businesses that will benefit from reduced property taxes in the state.

So far, of 22 active community solar energy systems, two currently meet the exemption requirements of the bill. With solar development surging, our team expects developers in Maryland to take advantage of this new law in a push for a greener future for the state.

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