Solar Sales Tax Saved Calculator

See how much sales tax you save on your solar installation by state. All 50 states with exemption status — enter your system cost and local tax rate for an exact calculation.

System & location details

State?

Total system cost?

Local/county tax rate?

Solar Sales Tax Savings — New York

$1,000

Sales Tax Saved (State Portion Exempt)

System cost

$25,000

State sales tax (4%)

$1,000

Local tax (4.5%)

$1,125

Combined rate

8.50%

Cost without exemption

$27,125

Effective cost with exemption

$26,125

New York — EXEMPTION STATUS

New York exempts residential solar energy systems from state sales tax under Tax Law §1115(ee).

STATES WITH SOLAR SALES TAX EXEMPTION

No sales tax: Alaska, Delaware, Montana, New Hampshire, Oregon

Exempt: Arizona, Colorado, Connecticut, Florida, Iowa, Maine, Massachusetts, Minnesota, New Jersey, New Mexico, New York, North Dakota, Pennsylvania, Rhode Island, Vermont, Wyoming

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How to Use This Calculator

Select your state

Your state determines whether a sales tax exemption exists for solar equipment. The calculator contains exemption status for all 50 states based on current statutes. States without any sales tax (Alaska, Delaware, Montana, New Hampshire, Oregon) obviously have no sales tax to exempt. States like New York, Massachusetts, New Jersey, Florida, and Arizona have explicit solar sales tax exemptions — the state portion of sales tax simply doesn't apply to qualifying solar equipment purchases.

Enter system cost and local tax rate

Use your installer's total contract price — including panels, inverter, racking, wiring, and labor. Enter your local or county sales tax rate separately from the state rate. Most state exemptions apply only to the state portion — local and county taxes may still apply even in exempt states. Your local rate can be found on your county assessor or state revenue department website.

Read your savings calculation

The result shows exactly how much state sales tax you save (or owe) based on your system cost and exemption status. The comparison table shows what you'd pay with and without the exemption, making it easy to include this savings in your total incentive calculation alongside the federal ITC.

The Formula

State Tax If No Exemption = System Cost × State Sales Tax Rate Local Tax = System Cost × Local Tax Rate Combined Tax Without Exemption = System Cost × (State Rate + Local Rate) With Exemption: Tax Saved = System Cost × State Rate (state portion exempt) Tax Still Owed = System Cost × Local Rate (local may still apply) Effective Cost = System Cost + Local Tax Without Exemption: Total Tax Owed = System Cost × (State Rate + Local Rate) Effective Cost = System Cost + Total Tax

Sales tax exemptions apply at the point of sale — your installer should not charge you state sales tax on solar equipment if your state has an exemption. If an installer includes state sales tax in their quote in an exempt state, ask them to remove it before signing. The exemption is typically documented on the installer's invoice. Unlike the federal ITC (which you claim on your tax return), the sales tax exemption is realized immediately at purchase — you never pay the tax in the first place.

Example

New York vs. California — same system, very different sales tax outcome

Two homeowners each install a $25,000 solar system. One is in New York (exempt), one is in California (not exempt). The difference in their upfront cost is significant.

System cost$25,000

New York state rate4.0% (exempt)

New York local rate (NYC)4.5% (may still apply)

California combined rate8.5% (no exemption)

Comparison

New York — state tax saved$1,000 (4% × $25,000)

New York — local tax still owed$1,125 (4.5% × $25,000)

California — full tax owed$2,125 (8.5% × $25,000)

Difference in effective system cost$1,000 in favor of New York

The New York homeowner saves $1,000 compared to what they'd pay without the exemption. The California homeowner pays $2,125 in sales tax with no exemption available. Both homeowners still get the 30% federal ITC ($7,500), but the California homeowner's net cost is $1,000 higher just from sales tax — a meaningful difference when stacking all incentives to calculate true out-of-pocket cost.

FAQ

How do I claim the solar sales tax exemption? ▼

In most states, the exemption is applied automatically at the point of sale — you don't have to file a form or claim anything. Your solar installer should know the exemption exists and simply not charge state sales tax on the qualifying equipment and installation. If an installer is charging you state sales tax in an exempt state, ask them to review the exemption before signing the contract. In some states (like New York), the installer may need you to sign a form certifying the system is for residential use to qualify. If you've already paid sales tax that should have been exempt, you can file for a refund with your state revenue department — check your state's process and time limits for refund claims.

Does the sales tax exemption apply to batteries and other components? ▼

It depends on the state's specific statute language. Most solar sales tax exemptions cover "solar energy systems" or "solar electric property" — which typically includes panels, inverters, racking, wiring, and installation labor. Battery storage is a grey area in many states — some explicitly include batteries (especially if charged 100% from solar), others don't. Electric vehicle charging equipment is usually not covered by solar exemptions. If your system includes a battery, ask your installer to itemize the battery separately and check your state's exact exemption language. New York's exemption (Tax Law §1115(ee)) covers "solar energy systems" broadly and has been interpreted to include batteries paired with solar.

Is the federal ITC calculated on the pre-tax or post-tax system cost? ▼

The federal ITC is calculated on the total cost you pay for the system — including any sales tax you pay. In states without a sales tax exemption, the sales tax you pay becomes part of your ITC basis. So a $25,000 system with $2,125 in California sales tax gives you an ITC basis of $27,125, and 30% ITC of $8,137.50. In states with an exemption where you pay no state sales tax, your basis is lower and ITC is slightly smaller. The practical effect: paying more sales tax isn't entirely wasted — it marginally increases your federal ITC. But this doesn't change the calculation that exemptions still save you money overall (exemption saves the full tax dollar, but would have only generated 30 cents of additional ITC).

Which states have the most valuable solar sales tax exemptions? ▼

The most valuable exemptions are in states that both have high tax rates AND grant full exemptions: Rhode Island (7% + exempt) saves $1,750 on a $25,000 system. Massachusetts (6.25% + exempt) saves $1,562. Minnesota (6.875% + exempt) saves $1,719. New Jersey (6.625% + exempt) saves $1,656. Connecticut (6.35% + exempt) saves $1,587. Florida (6% + exempt) saves $1,500. By contrast, states with no exemption but high rates impose the largest tax burdens: Tennessee (7%, no exempt) costs $1,750. Mississippi (7%, no exempt) costs $1,750. Indiana (7%, no exempt) costs $1,750. Texas (8.25% combined in most jurisdictions, no exempt) can cost over $2,000 on a $25,000 system.

What other solar incentives should I calculate alongside sales tax savings? ▼

A complete solar incentive stack includes: Federal ITC — 30% of system cost (largest incentive). State sales tax exemption — immediate savings at purchase (this calculator). State income tax credit — additional credits in states like NY, HI, MA, SC, OR, UT. Property tax exemption — most states exclude solar value from property tax assessments, saving you ongoing annual taxes. Utility rebates — some utilities pay per kW installed or per kWh generated. SREC income — solar renewable energy certificates in qualifying markets. Net metering credits — ongoing monthly electricity bill savings. The federal ITC alone is typically 5-10× more valuable than the sales tax exemption, but the sales tax exemption is realized immediately at purchase rather than waiting for tax filing season.

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