Solar and Wind Energy Device Franchise Tax Deduction

Program Solar and Wind Energy Device Franchise Tax Deduction
Category Financial Incentive
Implementing sector State
Last Update
State Texas
Administrator Comptroller of Public Accounts
Website http://www.seco.cpa.state.tx.us/re/incentives-taxcode-statutes.php
Start Date
Technologies Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Solar Photovoltaics

Texas allows a corporation to deduct the cost of a solar energy device from the franchise tax in one of two ways:

  • The total cost of the system may be deducted from the company's taxable capital or,
  • 10% of the system's cost may be deducted from the company's income.  

Both taxable capital and a company's income are taxed under the franchise tax, which is Texas's equivalent to a corporate tax. 

For the purposes of this deduction, a solar energy device means "a system or series of mechanisms designed primarily to provide heating or cooling or to produce electrical or mechanical power by collecting and transferring solar-generated energy. The term includes a mechanical or chemical device that has the ability to store solar-generated energy for use in heating or cooling or in the production of power." Under this definition wind energy is also included as an eligible technology.

Texas also offers a franchise tax exemption for manufacturers, seller, or installers of solar energy systems which also includes wind energy as an eligible technology.

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