On July 1, 2025, Governor Ned Lamont signed into law Public Act No. 25-173, titled An Act Concerning Energy Affordability, Access and Accountability. This legislation introduces a new municipal tax targeting certain large-scale solar photovoltaic systems.
Effective Date:
The new tax provisions will take effect on July 1, 2026.
Scope of the Tax:
The law imposes an annual municipal tax on solar PV systems that meet the following criteria:Generate electricity through the photovoltaic effect.
- Have a nameplate capacity exceeding one (1) megawatt (MW) and such nameplate capacity exceeds the load for the location where such generation is located.
- Receive operational approval on or after July 1, 2026.
Tax Rate and Duration:
The tax is set at $10,000 per MW of nameplate capacity, payable annually for 20 years.
Exemptions:
The law provides several exemptions to ensure that critical infrastructure and environmentally strategic sites are not penalized. Exempt systems include those:
- Located on state-owned land, brownfields, or landfills.
- Installed on residential, commercial, or industrial rooftops, or as solar canopies.
- That are part of a microgrid serving essential services such as hospitals, emergency response facilities, water treatment plants, and other critical infrastructure.
Revenue Distribution and Payment Terms:
- Tax revenue is paid directly to the municipality where the system is located and is treated as general municipal income.
- If a system spans multiple municipalities, the tax is apportioned based on capacity within each jurisdiction.
- Municipalities may allow annual, semiannual, or quarterly payments.
- Delinquent payments accrue interest at a rate of 1.5% per month.
Appeals and Stabilization Agreements:
System owners may appeal tax assessments to the Superior Court. If they pay at least 75% of the assessed amount under protest, they are not liable for interest during the appeal process. Municipalities also have the option to enter into agreements to freeze or stabilize the tax for systems within their borders. However, such agreements apply only to the portion of the system located within the agreeing municipality.
If you would like to learn more about the new legislation, please contact David Bigger or Elva Saltzman. This blog will be updated when more information becomes available.