As large solar arrays have proliferated across Connecticut in the last decade, so have questions about how much tax revenue local governments can draw from the fields of panels. For years, state law gave municipalities and their tax assessors the leeway to determine the value of solar panels and other equipment subject to personal property taxes. At the same time, developers could seek a variety of tax exemptions on their projects allowing them to drastically reduce — or in some cases eliminate — their local tax obligations. Towns have faced challenges even with projects that don’t qualify for tax exemptions, because the value of solar panels tends to depreciate quickly. In some cases that’s left towns with budgetary holes to fill in the years following a project’s initial installation. As a result, litigation has erupted in some towns over tax bills for solar projects. Fearing financial uncertainty, both developers and municipal leaders have negotiated deals to stabilize their tax payments and provide more predictability to both parties. They’ve also appealed to lawmakers for a long-term solution. After several failed attempts to address the issue, lawmakers passed an omnibus energy bill during the 2025 legislative session that includes a new calculation for levying taxes on large solar arrays. The law, which applies to commercial solar facilities that commence operation after July 1, 2026, creates a uniform tax of $10,000 a year for every megawatt of electricity the panels are capable of producing. For example, an averaged-sized facility with an installed capacity of 6 megawatts would pay $60,000 in annual taxes to the town in which it is located. The uniform capacity tax, as it’s known, only applies to large, ground-mounted solar arrays with an output of over 1 megawatt. (Most residential rooftop systems, for example, are between 5 and 10 kilowatts in size and are exempt from property taxes.) The author of the policy was state Rep. Jamie Foster, D-Ellington, whose district in the Connecticut River Valley is home to several of the state’s largest solar arrays. Under the new system, Foster said that most commercial solar developers will no longer be eligible for broad exemptions from local property taxes (including those for distributed energy systems). But when taxes are easier to calculate, she said, it’s simpler for developers to project future costs and secure financing for their projects. It’s not that commercial developers are all trying to avoid paying local taxes, Foster said. They just want to know exactly what their tax liability will be, so they’re not surprised after the fact, she said. The uniform capacity tax applies for 20 years, during which time solar developers will be exempt from paying personal property taxes on the equipment. The land underneath the array is still subject to local real estate taxes. The law exempts arrays built on state-owned land, brownfields, landfills, solar canopies or systems that are designed to power certain critical facilities such as a hospital or police station. Despite widespread support for a more uniform tax structure, talks in the legislature stalled for years as developers and local officials debated the exact tax rate commercial solar projects should face. In 2021, state Sen. Cathy Osten, D-Sprague, introduced legislation proposing a flat, $5,000-per-megawatt tax on commercial solar arrays. While Rhode Island already had a similar law charging the same rate for solar facilities, Osten said the idea failed to gain traction in Connecticut. “I don’t think people understood the concept of it, and nobody had had the experience,” Osten said. “I think it took a long time to get people’s interest on it.” Verge’s Southington Solar One project along East Street is seen on Friday, July 10, 2026. The 31-acre solar photovoltaic farm was commissioned in 2022 and has a 4.725 MWAC capacity. Credit: Sarah Gordon / CT Mirror The following year, lawmakers tucked language into a broader energy bill requiring the Office of Policy and Management to conduct a study of taxes that are applicable to commercial solar projects. That report, released in 2023, highlighted the number of legal disputes over tax exemptions and called for a more “clear and consistent framework.” Over the next several years, Foster said negotiations over setting a flat tax ranged from the initial $5,000-per-megawatt proposal to some as high as $13,000-per-megawatt. By 2025, the two sides were able to meet at around $10,000, according to multiple people involved in the discussions. “I think it was really tied to figuring out what that number should be that created the delay,” said Will Herschel, chief executive at West Hartford solar developer Verogy. The idea gained the support of East Windsor First Selectman Jason Bowsza, whose town is home to the largest concentration of commercial solar arrays in Connecticut, with seven facilities either active or under development. Bowsza said the town was able to negotiate a tax stabilization agreement with one developer; another developer agreement was worked out via court settlement. Bowsza said five other projects qualified for exemptions allowing them to pay no property taxes. Earlier this year, Bowsza and other local officials successfully lobbied lawmakers to pass a moratorium on new solar development in East Windsor and neighboring Enfield due to frustrations over the amount of land being turned over to developers, in addition to the loss of revenue from tax-exempt projects. But for other towns that are just starting to field interest from solar developers, having a standard tax rate will make it easier for local officials to determine whether or not a specific project is in the best interest of the town — and its finances — Bowsza said. It’ll be easier to compare the revenue a town currently receives from a given property against what it would receive if solar were installed there, Bowsza said. “They can then decide based on looking at those numbers whether or not they want to contest an application.” During the 2026 legislative session, before the new tax went into effect, lawmakers made a last-minute fix to it. A drafting error in the original legislation had exempted some existing projects from having to pay personal property taxes. Foster said the inadvertent exemption applied to around six projects. The fix, which was included H.B. 5442, subjected those projects to the uniform capacity tax starting in 2026 and lasting for 19 years — as opposed to 20 for those projects that commence operations this year. ...read more read less