116 3rd St SE
Cedar Rapids, Iowa 52401
CEDAR RAPIDS — Eastern Iowa — especially Linn and Johnson counties — leads the state in solar energy installations based on tax credits awarded by the state.
Washington, Winneshiek and Dubuque counties each have between 401 and 600 solar energy installations that received Solar Energy System Tax Credit Awards. Linn and Johnson each have more than 601, according to a year-end report from the Iowa Department of Revenue.
“Although installations have been widespread, the prevalence is geographically concentrated in Eastern Iowa,” the department said in the annual report on the state’s non-refundable tax credit, which is available for taxpayers who install a solar energy system on property located in Iowa.
The Iowa Legislature enacted the tax credit in 2012, part of a deal worked out by House and Senate Ways and Means Chair Tom Sands, R-Wapello, and Joe Bolkcom, D-Iowa City. Sands wanted to get rid of the state sales tax on car washes, and Bolkcom wanted the solar credit, the Iowa City senator recalled.
In 2012, the first tax year the credits were available, 158 residential and 45 business installations received credits amounting to $652,144 — the only time the credits awarded were less than the amount available. The total number of credit awards for both residential and business installations climbed after that as the Legislature increased the maximum awards and raised the cap to $5 million per year.
Over 10 years, the state has awarded $41.6 million in credits to 7,224 installations. The 4,608 residential projects received $14.8 million in credits and 2,666 business installations were awarded credits worth nearly $26.8 million. The average residential credit has grown from $1,850 in 2012 to $3,215 in 2021. The average business credits increased from $7,997 to $9,990 in 10 years.
“That solar credit turned out to be an enormously successful credit,” Bolkcom said. “We probably spent $30 (million) or $40 million state money over 10 years and probably got $400 million addition in private investment” in solar installations.
The credit also has been good for job creation, Bolkcom said.
“You know, a lot of the tax stuff we do, we help West Des Moines or we help Des Moines,” he said, using economic development assistance for data centers in the state’s larger communities as an example. “It's all this concentration of state investment, but that little solar credit really helped little people all over.”
In 2021, there were 1,062 awards — 828 residential and 234 business — for a total of $5 million in credits, according to the Revenue Department.
In recent years, applications for the credit have exceeded the $5 million cap, so the department created a waitlist. According to the report, there are 167 applications totaling $1.56 million in 2022 credits on the waitlist. Business applications that have not been reviewed or are pending amount to an additional $1.9 million. Another 1,409 residential applications for $4.5 million in credits have been denied.
Although the credit expired and is unavailable to residential installations completed after Dec. 31, applications for 2021 installations can continue to be filed until May 2.
According to the report, there are 14 counties with fewer than six solar installations that received the tax credit. In another 22 counties, there have been between six and 15 installations that received the credit. Most of those counties are in rural, Western Iowa.
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