LOWNDES COUNTY – Officials are raising the alarm about a 2025 tax law regarding solar developments that could cost the county – and nearly 30 other counties across the state – hundreds of thousands in lost tax revenue.
During the board of supervisors regular meeting Monday, Tax Assessor Greg Andrews told the board he planned to send letters to counties with solar developments alerting officials there to the financial impact of the law, which he said creates a tax advantage for solar projects.
“These solar farms are being treated differently than every other industry,” Andrews told The Dispatch after the meeting. “… And 28 counties (with solar developments) don’t understand the impact.”
When industrial properties are assessed for ad valorem taxes, the original construction cost is adjusted upward for inflation and then depreciated for age. The result is the taxable value on which a property owner’s bill is based.
Senate Bill 3166, however, carves solar developments out of that process, which applies to all other industrial properties. The law, passed during the 2025 Legislative Session, sets the inflation factor for solar developments at 1, essentially freezing the starting value and lowering the taxable value compared to what it would be under standard rules for industrial properties.
For example, a $100 million solar farm built in 2020 would still be worth $100 million in 2026 under the provision, while a comparable industrial facility would be valued at roughly $120 million before depreciation is applied.
The law specifies that the 1 inflation factor will be used specifically when the Marshall Valuation Service – the national cost data standards used by appraisers and insurers – does not provide an inflation factor specifically for solar and wind facilities.
Andrews said Marshall Valuation doesn’t publish a dedicated factor index specifically for solar installation, however, the service recommends that an “average-of-all” inflation factor be applied when no specific cost index is available.
Mississippi Department of Revenue uses the same approach for other industrial categories, Andrews said, making solar an unexplained exception.
The issue is only compounded by the addition of tax incentives counties have already granted to solar developments.
Andrews said Lowndes County, which has about $643 million worth of solar panels across more than 4,000 acres, has existing fee-in-lieu agreements with solar developers that reduce their taxable value.
In a fee-in-lieu agreement, companies are exempt from property taxes for up to 10 years in exchange for a fee paid to the city, county and school district. State law dictates the fee cannot be less than one-third of what a company would ordinarily pay in taxes.
Trip Hairston, president for the board of supervisors, said SB 3166 gives solar developments an extra advantage on top of what local governments already provided.
“I’m not one of those people who thinks we should just tax everybody into oblivion, but why do they get a special (incentive) on top of the fee in lieu?” Hairston told The Dispatch after Monday’s meeting. “The fee in lieu was already there. We’ve given them a special incentive on the county level. Why does the state give them another one?”
In Lowndes County, Andrews projects the gap between what the county would collect under the new law versus what it would collect under the standard assessment process for industry reaches more than $840,000 in year seven.
Hairston said a bill was dropped during the legislative session earlier this year to address the issue, but it did not advance. His hope is for the county to raise enough awareness among affected counties ahead of the next session.
“Twenty-eight counties I don’t think realize the impact of what it’s going to do with their budgets,” he said. “They’re going to get this money, and then all of a sudden, it’s going to be gone.”
McRae is a general assignment and education reporter for The Dispatch.
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