Wind Energy Credits Extended and Phased-Out
An income tax credit is allowed for the production of electricity from wind facilities. This credit is equal to 1.5 cents per kilowatt-hours of electricity produced. The producer can also elect to take 30% of the cost of the facility as a credit against their income taxes instead of the production credit (Warren Buffett’s Berkshire Hathaway is the largest user of these credits). These credits were scheduled to expire for any projects beginning construction after December 31, 2014.
However, this period has been extended to construction starting before January 1, 2020 with certain phase-outs. If construction starts after December 31, 2016 and before January 1, 2018, there is a 20% reduction. For 2018 starts, it phases-out by 40% and for 2019 starts, the phase-out is 60%.
Most farmers do not build wind energy projects, however, many farmers are approached by wind energy companies to build wind energy towers on their property. This indicates you may be approached by these companies again in the next couple of years.
Paul Neiffer, CPA
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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