Investment Tax Credit

Last updated: January 27, 2020

Program Overview

Implementing Sector:State
Category:Financial Incentive
Incentive Type:Personal Tax Credit
Web Site:
Administrator:Vermont Department of Taxes
Start Date:01/01/2009
Eligible Renewable/Other Technologies:Solar Water Heat, Solar Space Heat, Geothermal Electric, Solar Thermal Electric, Solar Thermal Process Heat, Solar Photovoltaics


Name:32 V.S.A. § 5822 (d)
Date Enacted:3/19/2008 (subsequently amended)
Effective Date:07/01/2008
Expiration Date:12/31/2016


Investment Tax Credit

Vermont offers an investment tax credit for installations of renewable energy equipment on business properties. The credit is equal to 24% of the "Vermont-property portion" of the federal business energy tax credit. For solar, small wind, and fuel cells this constitutes a 7.2% state-level credit for systems placed in service on or before 12/31/2019. This credit will step down (according to the federal tax credit's step-down schedule) to 6.24% for systems placed in service by 12/31/2020 and 5.28% for systems placed in service by 12/31/2021. After this date, solar technologies are eligible for a 2.4% credit. The geothermal tax credit is 2.4% indefinitely.* Any unused tax credit may be carried forward for 5 years.


Vermont created this credit starting for Tax Year 2002 and provided an additional incentive for solar investments for Tax Year 2008 (via S.B. 209). The solar-specific tax credit was amended several times (by the Vermont Energy Act of 2009 (H.B. 313, May 2009), by H.B. 781 in June 2010 and again by H.B. 56 in May 2011). The solar credit was equal to 100% of the "Vermont-property portion" of the federal business energy tax credit for solar from 2008 through 2010. In effect, this constituted a 30% state-level credit for solar during those years. As of 2012, the solar business tax credit has expired and the investment tax credit remains.  

The federal business energy investment tax credit was extended in December 2015.

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