New table for determining taxable value of utility-scale solar will boost county revenues

March 19, 2021

Effective tax year 2021 the Virginia State Corporation Commission (SCC) is employing a revised depreciation schedule for solar generating equipment that will impact the taxable value under machinery and tool (M&T) of existing (and future) solar generating equipment at the “utility scale” (greater than 25 megawatts). It is important to note that this revised schedule significantly increases the taxable value of property over the life of a project. VACo has supported revising this schedule as it more accurately reflects the useful life, and thereby the fair market value (FMV), of solar electric generating equipment.

Under the previous SCC schedule the percentage of taxable FMV declines steadily years 6 through 23 and reaches a floor of 10% in year 24 and beyond. The revised schedule has taxable FMV declining less rapidly, reaching a floor of 10% in year 34 and beyond. As an illustrative example, under the newly adopted schedule a 100-megawatt facility with an FMV of $200 million operating in a county with a tax rate of 66 cents on $100 of assessed value would generate approximately $9.8 million in tax revenue over 35 years. Under the now retired schedule the revenue over the same period would generate approximately $6.6 million in tax revenue.

VACo Contact: Joe Lerch, AICP

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