PANELS Act (H.R. 1237) would amend the Internal Revenue Code to bar federal energy incentives for solar projects that are located on prime farmland or unique farmland. Specifically, it would deny both the Investment Tax Credit (the energy credit under Section 48) and the Clean Electricity Production Credit (Section 45Y) for solar energy property placed in service after enactment if the project sits on land defined as prime or unique farmland. The bill ties those land classifications to the definitions used by the Secretary of Agriculture (as laid out in 7 CFR Part 657). In short, the bill aims to protect certain farmland from being used to qualify for federal solar tax incentives, potentially shifting solar development away from prime agricultural land.
Key Points
- 1The energy tax credit for solar properties would be denied if the project is located on prime farmland or unique farmland. This affects Section 48(a)(3) and related provisions for qualifying property.
- 2A formal definition: prime farmland and unique farmland would be defined in the Internal Revenue Code by referencing the Secretary of Agriculture’s definitions in 7 CFR Part 657 (added as 48(c)(9)).
- 3Solar facilities would be disqualified from qualifying for the energy credit if they are located on prime or unique farmland (amendment to 48(e)(2)(A)).
- 4The Clean Electricity Production Credit (Section 45Y) would exclude any solar facility located on prime farmland or unique farmland from being a “qualified facility.”
- 5Effective date: these changes apply to property placed in service after enactment.