Solar Project Credit (code 24)

UC §59-10-1024

Utah allows a non-refundable credit for purchases of units in a solar project that a qualifying political subdivision sells to a taxpayer in exchange for a credit on the taxpayer’s electrical bill.

The credit is available on Utah individual, fiduciary, and corporation tax returns. The credit is passed-through to partners, members and shareholders on partnership, LLP, LLC, and S corporation returns.

This credit must be apportioned for nonresident and part-year resident individuals of Utah based on the Utah income reported compared to total income.

A qualifying political subdivision means a city or town in Utah, an inter-local entity created under Title 11, Chapter 13, Inter-local Cooperation Act, or a special service district created under Title 17A, Chapter 2, Part 13, Utah Special Service District Act.

A qualifying solar project is an active solar system that a qualifying political subdivision constructs, controls or owns, and with respect to which the political subdivision sells one or more electrical output units (a portion of the electrical output from the solar project) which is furnished for the benefit of one or more residential units. The purchaser must agree to bear a proportionate share of the expenses of the solar project in accordance with a written agreement.

An active solar system is a system of equipment capable of collecting and converting incident solar radiation into thermal, mechanical, or electrical energy, and transferring this energy by a separate apparatus to storage or to the point of use. An active solar system includes water heating, space heating or cooling, and electrical or mechanical energy generation.

The following worksheet may be used to calculate the credit.

Qualifying Solar Project Credit Calculation
1. Amount paid to purchase qualified solar units $
2. Credit percentage – 25% .25
3. Calculated credit – multiply line 1 by line 2 $
4. Maximum credit allowed $   2,000
5. Credit allowed – lesser of line 3 or line 4 $
6. Tax liability on return before credit $
7. Allowable credit – lesser of line 5 or line 6 $
8. Credit carryover to next year – line 5 less line 7 $

Enter the credit on line 7 above on your Utah TC-40A, Part 3, using code 24.

Any tax credit that is more than the tax liability or in excess of $2,000 may be carried forward to offset tax for up to four years. The credit calculated above is in addition to any other energy credit you claim.

There is no form for this credit. Keep all related documents with your tax records.

For more details, contact your city or electrical utility provider.