Important Update on the Solar Energy System Tax Credit
The Iowa Solar Energy System Tax Credit expires and is unavailable under Iowa law for residential installations completed after December 31, 2021. Therefore, any residential tax credit request that does not receive a tax credit award during the 2021 award year will expire under Iowa law and will not carry forward on the waitlist to future years. This result is required under Iowa Code section 422.11L and the version of the federal residential solar tax credit (Internal Revenue Code section 25D) to which Iowa is conformed. Submitting an application before the residential tax credit expires at the end of 2021 is no guarantee a taxpayer will receive an award, as described below.
The Iowa solar energy system tax credit for business installations does not expire at the end of calendar year 2021, but Iowa law provides that it will only apply to installations that begin construction before calendar year 2022, so its availability will be limited in the future. Valid and timely business tax credit requests will not expire under Iowa law and may carry forward on the waitlist to future years.
On May 1, 2021, the Department of Revenue began the process of awarding Iowa solar energy system tax credits for the 2021 award year. The Department will issue tax credit award certificates to eligible applicants for the 2021 award year until the aggregate annual award limitation under Iowa law ($5 million) is met. The Department continues to receive and review applications for solar energy systems installed during 2021 and has a high volume of waitlisted applications from previous years. Tax credit applications are reviewed, waitlisted, and awarded in the order of the application’s submission date. Additional information about the 2021 award year and future award years is as follows:
2021 award year: The Department estimates that valid and complete business or residential applications with a submission date before October 1, 2020, will be eligible to receive a tax credit award and certificate during the 2021 award year. The Department is in the process of issuing these tax credit certificates.
2022 award year (business installations): The Department estimates that for business installation applications with a submission date of October 1, 2020, or later, the earliest a taxpayer may receive a tax credit award and certificate is during the 2022 award year. Tax credit certificates for the 2022 award year related to business installations will not be issued until after May 1, 2022.
2022 award year (residential installations): The Department estimates that for residential installation applications with a submission date of October 1, 2020, or later, the application and tax credit request will expire under Iowa law and the taxpayer will not receive an Iowa Solar Energy System Tax Credit.
The October 1, 2020 submission date cut off for 2021 and 2022 awards is an estimate and may change. If you complete a solar installation in 2021, you must file your application by the May 1, 2022 deadline to have a timely request. You are strongly encouraged to submit your application by the deadline even if you expect your request to expire as described above.
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