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.


State Solar Property Tax Exemption* Solar Sales Tax Exemption*
Alabama No exemption No exemption
Alaska Local exemptions No sales tax


100% exempt 100% exempt
Arkansas No exemption No exemption
California 100% exempt until 1/2/2025 No exemption
Colorado 100% exempt 100% exempt
Connecticut 100% exempt 100% exempt
Delaware No exemption No state sales tax
Florida 100% exempt 100% exempt
Georgia No exemption No exemption
Hawaii 100% NHL only No exemption
Idaho No exemption No exemption
Illinois Special assessment No exemption
Indiana 100% exempt No exemption
Iowa 100% exempt for 5 years 100% exempt
Kansas 100% exempt No exemption
Kentucky No exemption No exemption
Louisiana 100% exempt No exemption
Maine No exemption No exemption
Maryland 100% exempt 100% exempt
Massachusetts 100% exempt for 20 years 100% exempt
Michigan 100% exempt No exemption
Minnesota 100% exempt 100% exempt
Mississippi No exemption No exemption
Missouri 100% exempt No exemption
Montana 100% exempt for 10 years No state sales tax
Nebraska Exemptions only for systems over 100 kW No exemption
Nevada Exemptions only for certain systems over 10 MW No exemption
New Hampshire Local exemptions No state sales tax
New Jersey 100% exempt 100% exempt
New Mexico 100% exempt 100% exempt
New York 100% exempt for 5 years 100% exempt
North Carolina 80% exempt No exemption
North Dakota 100% exempt for 5 years No exemption
Ohio Exemptions in Cincinnati and Cleveland 100% exempt
Oklahoma No exemption No exemption
Oregon 100% exempt No state sales tax
Pennsylvania No exemption No exemption
Rhode Island 100% exempt 100% exempt
South Carolina No exemption No exemption
South Dakota

Exemption of either $50,000

or 70% of total property value

No exemption
Tennessee Tax value no more than 12.5% of the installed cost 100% exempt
Texas 100% exempt No exemption
Utah No exemption

Exemptions only for systems

over 2 MW

Vermont 100% exempt 100% exempt
Virginia Local exemptions No exemption
Washington No exemption

Exemptions only for systems

up to 10 kW

Washington DC 100% exempt No exemption
West Virginia No exemption No exemption
Wisconsin 100% exempt 100% exempt
Wyoming No exemption No exemption


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