Solar energy system sales tax exemption now in effect

OLYMPIA – Customers can now benefit from a sales tax exemption on the purchase and installation of qualified solar energy systems.

The exemption covers all sales tax paid on the purchase and installation of solar energy systems that generate up to 100 kilowatts (kW) AC of electricity. The exemption only applies to purchases made on or after July 1, 2019.

Customers must complete and provide a Buyer’s Retail Sales Tax Exemption Certificate to the seller. Sellers must keep the certificate in their records for five years.

To qualify for the exemption on the installation charges, the seller must:
• be registered with the Department of Labor and Industries as a contractor
• possess a current state unified business identifier (UBI) number
• possess proof of industrial insurance coverage
• possess an Employment Security Department number
• have no findings of violations of federal or state wage and hour laws and regulations in the past 24 months

Larger systems that generate between 101 and 500 kW AC can qualify for a 50% sales and use tax exemption beginning Jan. 1, 2020. This exemption works as a remittance: sellers will collect sales tax and submit it to the state, and customers will need to request a refund from Revenue.

This year, the Legislature passed Engrossed Second Substitute Senate Bill 5116, which promotes the state’s clean energy economy. This bill changes how Washington electric utilities generate electricity and provides the sales and use tax exemption on the purchase of renewable energy systems.

The Department of Revenue is Washington state’s primary tax agency, nationally recognized for innovation and quality customer service.

Revenue administers nearly 60 categories of taxes that help fund education, social services, health care, corrections, public safety, natural resource conservation and other important services counted on by Washington residents.