On May 4, 2017, Maryland became the first state in the nation to offer a tax credit to offset certain costs of installing an energy storage system. The idea behind the legislation is to encourage alternatives to the traditional electronic grid – if the utility providers are disrupted, third parties can take up the task through the distributed stored power. As energy storage becomes more popular, the legislation creates a valuable opportunity for businesses — but there is a limited time frame in which to take advantage.
On the heels of the Maryland law, Hawaii is working on implementing energy storage tax credits, while California, Massachusetts, and New York City have enacted mandates involving energy storage.
MD tax incentives for energy storage systems
Energy storage systems, according to the law, are “systems used to store electrical energy, or mechanical, chemical, or thermal energy that was once electrical energy, for use as electrical energy at a later date or in a process that offsets electricity use at peak times”. The scope of qualifying systems is far broader than batteries.
The tax credit is available for residential or commercial systems. The amount available is 30% of the cost of the installed system, up to $5,000 for a storage system installed on residential property or up to $75,000 for commercial properties. The tax credit is only available toward Maryland income tax and must be taken in the year applied.
To qualify, the systems must be installed between January 1, 2018, and December 31, 2022.
Limitations on Maryland energy storage tax credit
It is worth noting that the total tax credit available is limited. Under the law, a maximum of $750,000 may be issued across all taxpayers, and it is assigned on a first come, first served basis. To take advantage, a taxpayer must obtain a tax credit certificate from the Maryland Energy Administration.
Tax-planning counsel to optimize tax solutions
The Maryland energy storage tax credit is limited in aggregate amount available, and will be distributed to those claimants who take advantage first. If you expect to qualify for the tax credit, do not hesitate to contact the Maryland tax attorneys at Rosenberg Martin Greenberg to learn more about how you can maximize your financial advantage.
The landscape of tax credits is constantly changing, making it difficult for individuals and entities to stay on top of the the IRS and state tax updates. At Rosenberg Martin Greenberg, we make it our business to be up to date on important tax law changes so that clients can relax and know we have their financial interests covered. To learn more about your federal or Maryland tax credit options, we invite you to contact us for a consultation.
Additional “Maryland tax credit” resources:
- General Assembly of Maryland, SB0758 (CH0389): Energy Tax Credit – Energy Storage Systems, http://mgaleg.maryland.gov/webmga/frmMain.aspx?id=sb0758&stab=01&pid=billpage&tab=subject3&ys=2017RS
- General Assembly of Maryland, Article – Tax – general 13-203., http://mgaleg.maryland.gov/webmga/frmStatutesText.aspx?pid=&tab=subject5&stab=&ys=2017RS&article=gtg§ion=13-203&ext=html&session=2017RS
- JD Supra, Maryland Enacts First in the Nation Energy Storage Tax Credit, http://www.jdsupra.com/legalnews/maryland-enacts-first-in-the-nation-49486/