No. 6 Heating Oil Conversion Tax Credit

Starting July 1, 2023, the use of grade no. 6 heating oil for heating any facility is prohibited in New York State. To help businesses make the conversion to biodiesel heating oil or geothermal systems, the 2022-23 Enacted State Budget created a new Grade No. 6 Heating Oil Conversion Credit effective for tax years beginning on or after January 1, 2022.

How it Works

If your business pays taxes and meets certain eligibility requirements, you can claim a refundable tax credit equal to 50% for the costs paid to convert from grade no. 6 heating oil usage to biodiesel fuel or a geothermal system for your facilities. The costs must be paid by the business claiming the tax credit on or after January 1, 2022 and before January 1, 2024. The credit is capped at $500,000 per facility and can be claimed in the taxable year the conversion is complete. Costs associated with this conversion cannot be used for any other tax credit.

Eligible Facilities

To be eligible, your business must:

• Have facilities regulated pursuant to section 19-0302 or title 10 of article 17 of the Environmental Conservation Law.
• Have incurred expenses for the conversion from grade no. 6 heating oil fuel to biodiesel heating oil or a geothermal system after January 1, 2022 and prior to January 1, 2024 at any facility located in New York State and not located in New York City,
• Submit an application describing the conversion and detailing costs incurred to complete such conversion to and obtain approval from NYSERDA
• Not be principally engaged in the generation or distribution of electricity, power or energy
• Be in compliance with all applicable New York State Department of Environmental Conservation (NYSDEC) laws and regulations.
• Not owe past due state taxes, unless the business entity is making payments and complying with an approved binding payment agreement entered into with the taxing authority.
• Be subject to tax under Article 9-A or 22 of the Tax Law.

Definitions

Conversion costs are the equipment and labor costs associated with the design, installation, and use of space heating and other energy conversion systems that are designed to use, or accommodate the use of, biodiesel fuel or a geothermal system, and, at the option of the taxpayer, the costs of completing an ASHRAE level 2 energy audit including assessment of either conversion option.

Biodiesel is a minimum blend of 85% biodiesel, defined as fuel manufactured from vegetable oils, animal fats, or other agricultural or other products or by-products, with petrodiesel fuel commonly used for heating systems.

Geothermal is a system that uses the ground or ground water as a thermal energy source/sink to heat or cool a building or provide hot water within the building.

How to Apply

To verify your facility’s eligibility for this tax credit, you must complete the online application .

Upon receiving the required information, and after receiving confirmation from the Department of Environment Conservation (DEC) that the facility meets the environmental requirements, NYSERDA will issue a Tax Credit Certificate to be used when filing your tax return.

Have Questions or Need Assistance?

Please contact [email protected]