Senate advances bill to extend state solar tax credit to municipal and co-op utility customers

Senate File 441, carrying a four‑year, sliding state tax credit for small solar installations in municipal and electric cooperative territory, was heard Monday by the Minnesota Senate Tax Committee. Senator Erin Coleman, the bill’s author, offered the measure with an author’s A1 amendment that the committee adopted.

The bill is intended to give customers of municipal utilities and cooperative electric associations the same state‑level tax incentive available to customers of investor‑owned utilities, committee testimony said. “Installing solar allows Minnesotans to invest in their own property, home, or business and take control of their own energy bills,” Senator Erin Coleman said.

Senate File 441 limits eligible systems to 40 kilowatts or smaller, aligning with net‑metering limits for municipal and co‑op territory, and sets a temporary refundable credit that steps down over four years: 15 percent of qualified purchase and installation costs in 2025, 13 percent in 2026, and 11 percent in each of the final two years. The measure caps the credit at $2,500 for homeowners and $15,000 for businesses, and makes the credit refundable for lower‑income residents whose tax liabilities are smaller than the credit.

Logan O’Grady, executive director of the Minnesota Solar Energy Industries Association, and advocates from Vote Solar and Solar United Neighbors testified in support, arguing the credit would improve equity between utility territories and expand market opportunity for installers outside the Twin Cities. “This has been a multi‑year effort,” O’Grady said. Patty O’Keefe of Vote Solar said the credit would help lower upfront cost barriers and spur local jobs. Bobby King of Solar United Neighbors told the committee the refundable feature is important for farmers and lower‑income homeowners.

Committee members asked about federal policy interactions. Senator David Dibble referenced the Inflation Reduction Act and asked whether the state credit is still useful if federal incentives change; O’Grady and witnesses said the state credit would remain important for predictability and to support Minnesota businesses even if federal incentives were altered.

A revenue estimate provided to the committee noted the credit would cost roughly $15 million in 2026, rising to an estimated $36.5 million in 2029. After questions, the committee laid Senate File 441, as amended, over for possible inclusion in the omnibus tax bill.

Votes and formal actions recorded in the committee included adoption of the author’s A1 amendment and the motion to lay the bill over for possible inclusion.