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Tax Exemption for Farm Solar Equipment

California law provides an exemption from the state portion of the sales tax for farming equipment and machinery that is primarily used in agricultural activities.

BOE staff recently issued a new opinion clarifying that the tax exemption applies to solar equipment if the purchaser can “demonstrate that the solar facility is specifically designed to provide power to qualifying machinery.”  If you are planning to install a solar system, you may be eligible for an exemption from the state sales tax. If you have already installed a solar system, you may be eligible for a refund on taxes paid to your contract for purchases made up to three years ago. 

If you have not yet completed installation of your solar system, you may provide your contractor with a partial exemption certificate for the state portion of the tax assessed on the sale of solar panels.

Farmers who have already installed solar systems and completed their contracts will need to contact the contractor who installed your solar system for a refund of the state portion of the tax.  The contractor will be required to file a claim for refund with the Board of Equalization for the taxes you paid to the contractor who will in turn refund the money to you.  

Related Resources:

New Tax Interpretation Aids Farm Solar Power

Exemption for Farm Equipment and Machinery

Redacted BOE Opinion

Special Notice: Solar Power Facilities May Qualify as Farm Equipment

Questions?

If you have questions or need assistance, please do not hesitate to contact me.