Renewable energy projects are expanding nationwide as governments and industries respond to climate change and advancing technology. This growth is expected to continue for projects of all sizes, especially utility-scale developments that power thousands of homes by feeding electricity directly to the grid. Spanning thousands of acres, these large projects are most often built in rural places and frequently on agricultural land.
Like other properties, these projects pay taxes to local government units, including towns, schools, libraries, and others. Energy property taxes are usually much higher than farmland taxes, though the size of the difference depends on state tax laws. Large-scale wind and solar projects are typically taxed in one of two ways: ad valorem (based on land and equipment value, taxed at local rates) or as a Payment in Lieu of Taxes or PILOT (often a flat rate tied to the project’s electricity production capacity).
State policymakers determine which tax system applies and how it is implemented, balancing the trade-offs between lower taxes to attract developers and higher taxes to benefit host communities. These policies—from the broad structures to the tiny details—shape the size and distribution of tax payments over a project’s 20- to 40-year lifespan. Sometimes units like counties and schools may be affected differently, and some local residents may benefit more than others. Policymakers must also plan for decommissioning to prevent “boom/bust” revenue cycles that can occur when major taxpayers enter and exit. With many of these policies newly established, state and local officials are still learning their applications and impacts.
About this page
This website is intended to be a resource to understand the tax implications of renewable energy in eight Midwest states. This material is for informational purposes only and is not intended as legal advice.
To use this resource, view the calculators for your state of interest. You may use default values for a given state, or choose values based on your project. Key information and sources are provided within each calculator.
You may also wish to consult policy briefs for the states for more in-depth explanations of policies in your state of interest. View the policy briefs or take a look at the Google Sheets versions of these calculators by visiting the Center for EmPowering Communities project page, Local Property Tax Impacts of Large Scale Wind and Solar Projects.
