Real property tax: valuation: active solar energy system.
SB 1329
California Bills
20250SB__132996AMD INTRODUCED 2026-02-20 AMENDED_SENATE 2026-03-23 AMENDED_ASSEMBLY 2026-06-22 AMENDED_ASSEMBLY 2026-07-01 2025 SB AMD Introduced by Senator McNerney LEAD_AUTHOR SENATE McNerney
An act to add
Section 401.7 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy. taxation, to take effect immediately, tax levy Real property tax: valuation: active solar energy system. The California Constitution generally limits the maximum rate of ad valorem tax on real property to 1% of the full cash value of the property and defines “full cash value” for these purposes as the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the assessment.
Pursuant to constitutional authorization, existing property tax law excludes from the definition of “newly constructed” for these purposes the construction or addition of any active solar energy system, as defined, through the 2025–26 fiscal year, except as specified. This bill would establish uniform rules regarding the method of valuation of an active solar energy system.
The bill would set forth parameters for determining the value of an active solar energy system, as specified, and would provide that the valuation of such a system is limited to only the tangible property comprising the active solar energy system, and does not include intangible assets and rights of the system, as described.
By expanding the duties of local tax officials, this bill would impose a state-mandated local program.</xhtml:p>"?> This bill would prescribe rules for the valuation of an active solar energy system under certain valuation methods, including a requirement that, under the income method, the assessor exclude from income the benefit from, among other things, renewable energy credits, as defined. By expanding the duties of local tax officials, this bill would impose a state-mandated local program.
Existing law requires the state to reimburse local agencies annually for certain property tax revenues lost as a result of any exemption or classification of property for purposes of ad valorem property taxation. This bill would provide that, notwithstanding those provisions, no appropriation is made and the state shall not reimburse local agencies for property tax revenues lost by them pursuant to the bill. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state.
Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above. This bill would take effect immediately as a tax levy. This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of
Section of
Article XIII A of the California Constitution, and thus would require for passage the approval of 2 of the membership of each house of the Legislature.
TWO_THIRDS NO YES YES YES NO YES NO NO NO NO The people of the State of California do enact as follows: <caml:Num>SECTION 1.</caml:Num><caml:ActionLine action="IS_ADDED" xlink:href="urn:caml:codes:RTC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2F%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'73.3'%5D)" xlink:label="fractionType: LAW_SECTION" xlink:type="locator">Section 73.3 is added to the <caml:DocName>Revenue and Taxation Code</caml:DocName>, to read:</caml:ActionLine><caml:Fragment><caml:LawSection id="id_3C5EFCCE-9F75-49D7-96F9-443C553F6279"><caml:Num>73.3.</caml:Num><caml:LawSectionVersion id="id_90F990DB-22CA-41E2-8281-C233DBCF1C4A"><caml:Content><xhtml:p>(a)<xhtml:span class="EnSpace"/>An assessor shall value an active solar energy system or portion thereof consistent with the requirements of
Section 401. The methods of valuation shall include, but are not limited to, the comparable sales method, the income method, or the cost method.</xhtml:p><xhtml:p>(b)<xhtml:span class="EnSpace"/>For purposes of applying Sections and to determine the “full cash value,” “fair market value,” or “taxable value” of any active solar energy system or portion thereof, as defined in
Section 73, all of the following shall apply:</xhtml:p><xhtml:p>(1) <xhtml:span class="EnSpace"/>“Full cash value,” “fair market value,” or “taxable value” shall include only the tangible property comprising the active solar energy system or portion thereof, excluding value attributable to any assets in accordance with subdivision (
d) of
Section and subdivision (
c) of
Section 212.</xhtml:p><xhtml:p>(2)<xhtml:span class="EnSpace"/>When determining “full cash value,” “fair market value,” or “taxable value” of the tangible property comprising the active solar energy system or portion thereof, both of the following shall apply to the extent applicable to the given valuation approach:</xhtml:p><xhtml:p>(A)<xhtml:span class="EnSpace"/>The useful life and economic life of the active solar energy system shall not exceed the lesser of the following:</xhtml:p><xhtml:p>(i)<xhtml:span class="EnSpace"/>Twenty-five years.</xhtml:p><xhtml:p>(ii)<xhtml:span class="EnSpace"/>The active solar energy system’s remaining site lease term, including any extension options, measured from the time the system is placed in service.</xhtml:p><xhtml:p>(iii)<xhtml:span class="EnSpace"/>The applicable useful life set forth in Table P of the California Assessors’ Association’s Position Paper 26-001 on Business Assessment Factors, as updated periodically, subject to a minimum percentage factor of percent in the case of the cost method.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>Obsolescence includes, but is not limited to, external obsolescence. “External obsolescence” includes, but is not limited to, both the amounts of any United States duties and tariffs and the amounts of any federal tax credits and similar incentives that have been generated by the applicable solar energy system or portion thereof.</xhtml:p><xhtml:p>(3)<xhtml:span class="EnSpace"/>The replacement cost new shall be the original cost or taxable original cost of the active solar energy system, reduced by government subsidies in the form of tax credits or other similar subsidies, and subsequently multiplied by a depreciation percent good factor and by an inflation cost index factor.
In determining “replacement cost new,” the following shall apply:</xhtml:p><xhtml:p>(A)<xhtml:span class="EnSpace"/>The original cost or taxable original cost shall be limited to the actual cost of the active solar energy system build.</xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>The tax credits and similar subsidies to be deducted from the original cost or taxable original cost shall include those set forth under clause (
i) of subparagraph (
A) of paragraph (4) that are applicable to the active solar energy system.</xhtml:p><xhtml:p>(4) <xhtml:span class="EnSpace"/>(A)<xhtml:span class="EnSpace"/>For purposes of paragraph (1), “tangible property” shall not include intangible assets and rights, or any income or value arising from or attributable to those assets and rights, relating to an active solar energy system or portion thereof, including, but not limited to, both of the following:</xhtml:p><xhtml:p>(i)<xhtml:span class="EnSpace"/>Federal and state tax credits, cash grants, direct payments, or similar federal subsidies received or to be received.</xhtml:p><xhtml:p>(ii)<xhtml:span class="EnSpace"/>Renewable energy credits, as defined in paragraph (2) of subdivision (
h) of
Section 399.12 of the Public Utilities Code. </xhtml:p><xhtml:p>(B)<xhtml:span class="EnSpace"/>Nothing in this paragraph shall be construed to mean that a business operating an active solar energy system does not also have intangible assets and rights commonly found in general businesses, including, but not limited to, concessions, franchises, workforce in place, customer lists, trademarks, and copyrights.</xhtml:p><xhtml:p>(C)<xhtml:span class="EnSpace"/>The treatment of intangible assets, rights, and attributes, as described in this paragraph, shall be consistent with
Section 110. In this regard, the assets, rights, and attributes set forth in paragraph (3) shall not be considered intangible attributes of real property under subdivision (
f) of
Section 110.</xhtml:p></caml:Content></caml:LawSectionVersion></caml:LawSection></caml:Fragment></caml:BillSection>"?>
SECTION
Section 401.7 is added to the Revenue and Taxation Code , to read: 401.7. (
a) In valuing an active solar energy system under the income method of appraisal, the assessor shall exclude from income the benefit from both of the following:
(1) Renewable energy credits, as defined in paragraph (2) of subdivision (
h) of
Section 399.12 of the Public Utilities Code.
(2) Federal and state tax credits, cash grants, direct payments, or similar governmental subsidies. (
b) In valuing an active solar energy system under the cost method of appraisal, the assessor shall reduce the cost by any federal and state tax credits or similar governmental subsidies. (
c) For purposes of this section, “active solar energy system” shall have the same meaning as is provided in
Section 73.
SEC. 2. Notwithstanding
Section of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any property tax revenues lost by it pursuant to this act.
SEC. 3. If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to
Part 7 (commencing with
Section 17500) of Division of Title of the Government Code.
SEC. 4. This act provides for a tax levy within the meaning of