The Energy Policy Act of 2005 established tax credits for homeowners, home builders and commercial building owners who employ certain energy efficient improvements. The amount of credit and credit beneficiary varies among the type of improvement and building. Homeowners may receive up to $500 per year in federal income tax credits for specific improvements made to existing homes in 2006 and 2007. Eligible home building contractors may receive a credit of up to $2,000 for a qualified, new energy efficient home that is sold in 2006 or 2007. Commercial building owners or designers may earn a designated tax deduction based on the amount and type of energy-saving measure and their building’s square footage.

South Dakota Tax Incentives

South Dakota state law provides a local property tax exemption for renewable energy systems on residential and commercial property. The exemption applies to the entire assessed value of residential systems and 50 percent of the installed cost of commercial systems. The exemption may be taken for three years after installation. The exemption is not allowed for systems which produce energy for resale. Contact your local county director of equalization for information about the South Dakota renewable energy systems property tax exemption.