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2013 Legislative Update: Louisiana Energy Tax Credits

2013 Legislative Update: Louisiana Energy Tax Credits

Louisiana Energy Tax Credits Encourage Taxpayers to Go Green

In this summer’s session, the legislature made several changes to the Louisiana Energy Tax Credits, particularly those dealing with alternative fuel vehicles, wind energy systems, and solar energy systems.  Individuals and businesses considering investing in these alternative energy products should consult with their tax planning professional to make sure you are receiving the maximum tax benefit.

Alternative Fuel Vehicles

Acts No. 219 and 427 change the Louisiana Energy Tax Credits available for companies and individuals that purchase alternative fuel vehicles.  First, Act. No. 219  prohibits any tax credits for the purchase of a flexible fuel vehicle if the vehicle only has one fuel storage and delivery system and is still capable of running on petroleum gas or diesel.  Thus, while flex fuel vehicles can be a great way to safeguard against limited battery life and other technological limitations, the vehicle cannot solely be running on traditional petroleum products.

Act. No. 427 restricted the definition of what qualifies as an alternative fuel.  First, the law now has no reference to reduced emissions under federal clean air standards.  Second, the only alternative fuels that now qualify are natural gas, liquefied petroleum gas, and any nonethanol based advanced biofuel. 

Wait…liquefied petroleum gas – isn’t that what I get at the pump now?  Actually, no.  Liquefied petroleum gas actually refers to products like propane and butane. The more you know.

Presumably to limit the use of these tax credits for the purchase of scooters and golf carts while still promoting electric cars, the Act also allows a vehicle to qualify for a Louisiana Energy Tax Credit if it meets certain requirements.  The vehicle must have four wheels.  It must also be primarily manufactured for use on public roadways.  It must be able to go at least fifty-five miles per hour.  Finally, its electric motor must draw electricity from a battery capable of at least four kilowatt hours and recharging from an external source. 

Wind and Energy Systems

Act No. 428 made substantial changes to the Louisiana Energy Tax Credits available for wind and energy systems.  First, it repealed all tax credits available for wind energy systems.  Now, Louisiana only offers tax credits for solar energy systems meeting the new qualifications.  Second, the Act created a sunset date.  Now, only systems installed before January 1, 2018 can qualify for the credits.

The first major change to the Louisiana Energy Tax Credit for solar systems was that the Act repealed the credit for multi-family homes.  Now, only single family residences can qualify for the credit.  Second, to qualify, the systems must be purchased from someone licensed by the Louisiana State Licensing Board of Contractors and be compliant with the federal American Recovery and Reinvestment Act (ARRA).  Rather than promote recovery and reinvestment, however, these changes seem to have a negative impact on Louisiana businesses by taking away incentives for broader commercial use and effectively restricting who can sell these systems.

In terms of more innocuous changes, the Act strengthened the language limiting each system to one state tax credit.  Don’t worry – you can still stack federal and state incentives.  The Act also created requirements for leased systems to qualify for tax credits.  Finally, the Act created a more detailed definition for what qualifies as a solar electric system.

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For more information on Louisiana Energy Tax Credits or to find out about all of the tax credits and business incentive programs offered by the state, see Louisiana Economic Development.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.