States with the Highest Solar Tax Exemptions

The biggest incentives homeowners could get from solar energy installs are lessened taxes and maximized savings. These are even furthered by the different solar cash rebates offered by the federal government and solar installer providers. Such include tax credits from investment and state, cash rebates, solar renewable energy certificates (SRECs), and performance-based incentives (PBIs). 

Similarly, solar tax exemptions allow homeowners and even business owners to lessen the upfront or long-term cost of the solar panel system. The added costs of the solar installs are excluded from the property value and are much easier to obtain since they don’t require you to have income for you to claim them. 

However, not all states offer this incentive. This article will provide information on the different types of exemptions and help you identify the states with the highest solar tax exemptions.

Types of Solar Tax Exemptions:

There are two types of tax exemptions available: Solar Sales Tax Exemptions and Solar Property Tax Exemptions.

Solar Sales Tax Exemptions

Solar sales tax exemptions reduce the upfront or long-term cost of going solar. States with sales tax allow the homeowners and business owners to use 2.9% to 9.5% of sales tax to pay for the solar system installation. 

There are 18 states with this type of exemption, all with varying qualification requirements. In Arizona, solar sales tax exemptions are granted to the retail sale of solar energy devices and their installation by contractors. Whereas in Colorado, exemptions are given to all sales, storage, and usage of components from any renewable energy source. 

Property Tax Exemptions

Property tax exemptions help taxpayers with their tax payments by excluding the value of their solar systems from the valuation of their property. Moreover, the exemption also provides businesses and homeowners a more economically friendly option in installing their solar installs. This tax exemption is available in 36 states including New Jersey and Nevada.

In New Jersey, this is granted to those who meet on-site electricity, heating, cooling, or general energy needs. While in Nevada, this tax incentive is beneficial to both homeowners and businesses. They can apply for up to 55% tax abatement that can last for 20 years. This is applicable to business and personal properties with a capacity of at least 10 megawatts.  

State By State Breakdown of Tax Exemptions

States have diverse laws on property tax and sales tax. As shown in the table, property tax exemptions are available in 36 states while sales tax exemptions are only offered to 18. 

States with the highest solar property tax exemptions include Arizona, California, Colorado, Connecticut, Florida, Hawaii, Indiana, Kansas,  Louisiana, Maryland, Michigan, Minnesota, Missouri, New Jersey, New Mexico, Oregon, Rhode Island, Texas, Vermont, Washington DC, and Wisconsin. All these states are granted a 100% tax exemption. Other states not mentioned either offer lesser exemptions with a time limit or do not have exemptions at all.

States with the highest solar sales tax exemptions include Arizona, Colorado, Connecticut, Florida, Iowa, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Ohio, Rhode Island, Tennessee, Vermont, and Wisconsin.


StateSolar Property Tax Exemption*Solar Sales Tax Exemption*
AlabamaNo exemptionNo exemption
AlaskaLocal exemptionsNo sales tax


100% exempt100% exempt
ArkansasNo exemptionNo exemption
California100% exempt until 1/2/2025No exemption
Colorado100% exempt100% exempt
Connecticut100% exempt100% exempt
DelawareNo exemptionNo state sales tax
Florida100% exempt100% exempt
GeorgiaNo exemptionNo exemption
Hawaii100% NHL onlyNo exemption
IdahoNo exemptionNo exemption
IllinoisSpecial assessmentNo exemption
Indiana100% exemptNo exemption
Iowa100% exempt for 5 years100% exempt
Kansas100% exemptNo exemption
KentuckyNo exemptionNo exemption
Louisiana100% exemptNo exemption
MaineNo exemptionNo exemption
Maryland100% exempt100% exempt
Massachusetts100% exempt for 20 years100% exempt
Michigan100% exemptNo exemption
Minnesota100% exempt100% exempt
MississippiNo exemptionNo exemption
Missouri100% exemptNo exemption
Montana100% exempt for 10 yearsNo state sales tax
NebraskaExemptions only for systems over 100 kWNo exemption
NevadaExemptions only for certain systems over 10 MWNo exemption
New HampshireLocal exemptionsNo state sales tax
New Jersey100% exempt100% exempt
New Mexico100% exempt100% exempt
New York100% exempt for 5 years100% exempt
North Carolina80% exemptNo exemption
North Dakota100% exempt for 5 yearsNo exemption
OhioExemptions in Cincinnati and Cleveland100% exempt
OklahomaNo exemptionNo exemption
Oregon100% exemptNo state sales tax
PennsylvaniaNo exemptionNo exemption
Rhode Island100% exempt100% exempt
South CarolinaNo exemptionNo exemption
South Dakota

Exemption of either $50,000

or 70% of total property value

No exemption
TennesseeTax value no more than 12.5% of the installed cost100% exempt
Texas100% exemptNo exemption
UtahNo exemption

Exemptions only for systems

over 2 MW

Vermont100% exempt100% exempt
VirginiaLocal exemptionsNo exemption
WashingtonNo exemption

Exemptions only for systems

up to 10 kW

Washington DC100% exemptNo exemption
West VirginiaNo exemptionNo exemption
Wisconsin100% exempt100% exempt
WyomingNo exemptionNo exemption


Our solar professionals will help you to explain all the incentives available in your area!