Substitute House Bill No. 7266 establishes a uniform solar capacity tax for solar photovoltaic systems with a nameplate capacity greater than two megawatts, effective July 1, 2025. The tax is set at $11,000 per megawatt, with a 2% annual increase starting July 1, 2027, and will be collected by local municipalities for a period of twenty years beginning July 1, 2026. The bill also allows for tax stabilization agreements and outlines an appeal process for taxpayers. Additionally, it modifies existing property tax exemptions for renewable energy sources, specifically excluding the real property on which solar energy equipment is installed, and clarifies the criteria for tax exemptions related to Class I renewable energy sources.

Key insertions in the bill include provisions for municipalities to abate up to 100% of property taxes for certain renewable energy sources under specific conditions, while significant deletions involve the removal of previous exemption criteria and the introduction of new application requirements. Starting from assessment years after October 1, 2025, exemptions will only apply to equipment primarily for electricity generation, and individuals must file for exemptions by November 1 of the assessment year. Overall, the bill aims to promote renewable energy use while streamlining the tax exemption process for solar energy systems.