Derek Hansen
Thirty-one states have a solar sales tax exemption on the books right now. Most homeowners going solar have no idea, and more than a few installers don’t volunteer the information either. That’s a problem, because on a $25,000 system, a 6% state sales tax is $1,500 walking out your door for no reason.
Let me be clear about what this article is and isn’t. It’s not a fluffy “check with your tax professional” overview that tells you nothing. It’s a working guide to how solar sales tax exemptions actually function, which states have them, how to claim them, and where the rules get weird enough to bite you. I’ve walked through this with enough homeowners to know the mistakes people make, and most of them are avoidable.
- 31 states currently offer full or partial sales tax exemptions on residential solar equipment.
- On a $25,000 system, a 6% exemption saves roughly $1,500 at point of sale, no filing required.
- Exemptions typically apply to equipment (panels, inverters, batteries), not labor, verify with your installer.
- Some states require the homeowner to submit a form to claim the exemption; it's not always automatic.
- The federal ITC and state sales tax exemptions stack, you can claim both.
How the Exemption Actually Works
Solar sales tax exemptions are point-of-sale discounts, not tax credits you file for at the end of the year. When the exemption applies, the installer collects no sales tax on qualifying equipment. You pay less upfront. Done. There’s no form to file with the IRS, no receipt to hold onto for April 15th.
That said, “qualifying equipment” is where things get specific fast. In most states with an exemption, solar panels, inverters, racking hardware, and wiring qualify. Batteries are increasingly included, though a handful of states are still catching up. Labor almost never qualifies. The same goes for electrical panel upgrades, roof work, or any non-solar component of the job even if it’s on the same invoice.
I learned this distinction the hard way on behalf of a client in Maryland a few years ago. His installer bundled a $3,200 electrical panel upgrade into the solar quote. The panel upgrade wasn’t exempt under Maryland’s law, but it took three back-and-forths with the installer to get a correctly itemized invoice that separated the solar equipment from the non-solar work. Always get a line-itemized quote. Always.
Which States Actually Have It
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As of July 2026, 31 states offer some form of solar sales tax exemption for residential systems. The specifics vary considerably. Some states exempt 100% of solar equipment sales tax. Others cap the exemption at a dollar amount or tie it to system size.
A few states worth knowing in detail:
New York offers a full exemption from state sales tax (4%) on residential solar equipment. Local sales taxes are a different story, and they vary by county. Some New York homeowners are surprised to find they still owe county-level tax.
Florida exempts solar energy systems from the state’s 6% sales tax. This one’s been on the books since 1997 and is well-established. Installers in Florida should be handling this automatically, but confirm before you sign.
Texas has an exemption for solar devices used to produce electricity for on-site consumption. Note that phrase “for on-site consumption.” If your system is primarily for sale back to the grid, the exemption gets murky. Most residential net-metered systems qualify fine.
New Jersey exempts solar panels and related equipment from its 6.625% sales tax. New Jersey also has one of the more active solar markets in the country, and installers there are generally familiar with the rules.
States without exemptions include California (which relies more heavily on its own incentive programs), Illinois, and Georgia. If you’re in one of these states, the federal 30% Investment Tax Credit is your main lever, and it’s still substantial.
The States That Make You Work for It
Most exemptions are automatic at the point of sale, meaning your installer is responsible for not charging you tax. But a handful of states require the homeowner to submit documentation to claim the exemption or, in some cases, to get a refund after the fact.
Massachusetts is one example. The exemption applies to residential solar, but some installers initially charge tax and then issue a credit or refund after documentation is verified. If you’re in Massachusetts, ask your installer explicitly: “Are you going to charge me sales tax, and if so, how do I get it back?” Get that answer in writing.
North Carolina is similar. The state offers an exemption on solar energy property, but the process isn’t uniformly handled by all installers. I’ve seen quotes from NC contractors that included sales tax, where a quick conversation with the sales rep was enough to remove it. Other times, homeowners needed to complete Form E-599C (the state’s certificate of exemption) themselves.
This is the kind of thing only someone who’s actually worked through the paperwork would tell you: ask for the exemption certificate number or form name specific to your state before you close. If your installer says “we handle it automatically,” great. Ask them to show you the line on the contract where it says no tax is charged. If they’re vague, look up your state’s revenue department website. Every state that has an exemption publishes the applicable statute or code section.
How This Stacks With Other Incentives
Here’s what I find most homeowners miss: the federal Investment Tax Credit and the sales tax exemption aren’t mutually exclusive, and one affects the other in a specific way.
The 30% federal ITC is calculated on your total system cost. If your system costs $25,000 and you pay no sales tax because of a state exemption, your ITC is calculated on $25,000. If you somehow paid $1,500 in sales tax on top of that (say, in a state without an exemption), your ITC base would be $26,500, giving you a marginally larger credit. The difference isn’t massive, but the math matters.
| Scenario | System Cost | Sales Tax | ITC Base (30%) | ITC Value | Net Cost |
|---|---|---|---|---|---|
| With exemption (6% state) | $25,000 | $0 | $25,000 | $7,500 | $17,500 |
| Without exemption (6% state) | $25,000 | $1,500 | $26,500 | $7,950 | $18,550 |
| Without exemption, no ITC | $25,000 | $1,500 | N/A | $0 | $26,500 |
The point: the exemption saves you more than it costs you in reduced ITC base. By about $1,050 in this example.
Per the National Renewable Energy Laboratory (NREL), state-level incentives like sales tax exemptions typically reduce installed system costs by 4 to 7 percent when combined with local property tax exemptions. That compounds meaningfully over a system’s lifetime when you consider the financing you don’t need to take out.
Property Tax Exemptions: A Useful Neighbor
While we’re here, worth separating two things people conflate: sales tax exemptions and property tax exemptions. They’re different. A sales tax exemption reduces what you pay when buying the system. A property tax exemption prevents solar from increasing your assessed home value for tax purposes.
As of July 2026, roughly 36 states have some form of property tax exemption for solar installations. The U.S. Department of Energy maintains a database of state and local incentives (DSIRE) where you can look up both types by ZIP code. Bookmark it. It’s the most reliable single source for what’s available where you live.
A worked example of how these stack:
Denver, Colorado homeowner installs a 9.6 kW system at $28,800. Colorado has no state sales tax exemption for solar, but Denver has a local exemption covering the city’s 4.81% tax, saving $1,385 upfront. The same homeowner avoids a property tax increase on roughly $20,000 in added home value, saving approximately $200 to $300 per year in property taxes depending on local mill rates. Over 25 years, that’s $5,000 to $7,500 in property tax savings alone.
Monitoring Your System (and Your Savings)
Once you’ve gone solar and captured every available exemption, it pays to actually track your production. The Emporia Vue 3 energy monitor (around $140 on Amazon, affiliate link) is one of the better whole-home energy monitors for solar households. It clips onto your main panel breakers, pairs with a companion CT sensor on your solar feed, and shows you real-time production and consumption through an app. I’ve recommended it to homeowners who wanted something more granular than their inverter app alone.
Sources
- SEIA State Solar Policy: Solar Energy Industries Association tracking of state-by-state solar incentives and legislation.
- DSIRE Database (NC Clean Energy Technology Center): Comprehensive database of state and local solar incentives, updated regularly.
- National Renewable Energy Laboratory (NREL): Research on installed solar costs, incentive stacking, and market trends.
- U.S. Department of Energy, Homeowner’s Guide to Going Solar: Federal resource covering ITC, state incentives, and financing options.
- North Carolina Department of Revenue, Form E-599C: State certificate of exemption for solar and energy equipment purchases.
Recommended Resources
Disclosure: As an Amazon Associate, we earn a small commission from qualifying purchases at no extra cost to you. We only recommend products that genuinely support the topics covered in this article.
- Renogy 200W Solar Starter Kit + 30A Charge Controller (~$169), Complete beginner solar kit, 200W monocrystalline panel, charge controller, and mounting hardware included.
- EF EcoFlow DELTA 2 Portable Power Station (1024Wh) (~$599), 1024Wh LFP battery with 1800W output, top-rated solar generator for home backup power. Charges in under 2 hours.
