Wind and solar projects in Indiana are taxed like other types of property. County assessors determine the value of the land and equipment, and projects pay taxes at local rates to counties, townships, schools, and other units. Indiana limits the amount of property tax revenue that local units can collect, so a project with high property value (like a wind or solar project) does not always lead to a direct increase in local budgets. Instead, local officials can decide to reduce the taxes of neighboring property owners and/or to help finance public projects outside revenue restrictions. Local governments can also implement economic development agreements, tax abatements, and/or tax financing to change the size and distribution of tax impacts.
Agricultural land value is determined by a statewide base price per acre, which is then adjusted depending on the property’s soil quality and land type.
Land under solar panels is valued according to a standard minimum price per acre, called regional base rates. Rates are set annually by the state, with different rates for three regions in Indiana.
Land under wind turbines is classified as industrial property and assessed at market value. Surrounding farmland, if still in agricultural use, continues to be taxed as farmland.
Equipment such as wind turbines and solar panels are considered personal property and are assessed based on their initial cost, often constituting the largest share of the property value increase.
If the larger tax payments would cause a county or local unit to exceed its tax revenue limits for the year, the unit may choose to lower tax rates. In this case, the project’s impact is delivered to neighbors as a reduction in their annual tax bills. If the unit chooses to maintain rates, it must find other ways to collect project revenue that bypass limits, like economic development agreements or public financing. If the added tax revenue does not exceed the unit limit, project payments boost the local budget, enabling public services to improve or expand. In either case, the total benefit from property tax changes can be calculated as the difference between the project tax payments and the previous farmland payments.
Click on the button above to understand the tax impacts for wind and solar projects. Note that all values are estimates.