Renewable Energy Systems Sales Tax Exemption
Vermont exempts qualifying renewable energy systems from the state's 6% sales tax, which lowers the upfront cost of equipment such as solar electric, small wind, or solar water heating. It covers both grid-tied and off-grid systems, including electric systems up to 500 kW and micro-CHP up to 20 kW. Ask your installer to apply the exemption at purchase, and check with the Vermont Department of Taxes about any documentation needed.
You can offer customers equipment that is exempt from Vermont's 6% sales tax, which makes projects cheaper and easier to sell. The exemption applies to grid-tied and off-grid electric systems up to 500 kW using eligible renewable resources, micro-CHP up to 20 kW, and solar water-heating systems. Confirm that each system's technology and size qualify under 30 V.S.A. § 8002 and ask the Vermont Department of Taxes how to document exempt sales.
This is a sales tax exemption created under the Miscellaneous Tax Reduction Act of 1999 (H.B. 0548) that originally covered only net-metered systems and now also covers off-grid systems. It applies to electric systems up to 500 kW using renewable resources as defined in 30 V.S.A. § 8002 (including landfill and sewage biogas and agricultural anaerobic digestion), micro-CHP up to 20 kW, and solar water heating. It is funded through foregone 6% sales tax revenue rather than an appropriation and serves residential, commercial, and agricultural customers.
Program details
- Program ID
- 44
- Effective
- 1/26/1999
- Last updated
- 4/14/2026
Eligibility
- Sectors
- commercial residential agricultural
- Technologies
- solar water heat solar thermal electric solar photovoltaics wind (all) biomass combined heat & power landfill gas wind (small) anaerobic digestion fuel cells using renewable fuels
Program summary
Vermont's sales tax exemption for renewable energy systems, originally enacted as part of the Miscellaneous Tax Reduction Act of 1999 (H.B. 0548), initially applied only to net-metered systems. The exemption now generally applies to systems up to 500 kilowatts (kW) in capacity that generate electricity using eligible "renewable energy" resources (as defined under 30 V.S.A. § 8002), to micro-combined heat and power (CHP) systems up to 20 kW, and to solar water-heating systems. The exemption is available for grid-tied systems and off-grid systems alike. Vermont's sales tax rate is 6%.
"Renewable energy" is defined under 30 V.S.A. § 8002 as "energy produced using a technology that relies on a resource that is being consumed at a harvest rate at or below its natural regeneration rate." Biogas from sewage treatment plants and landfills, and anaerobic digestion of agricultural products, byproducts, and wastes are explicitly included. (The term "renewable energy" explicitly excludes solid waste that is not agricultural or silvicultural, as well as nuclear fuel, coal, oil, propane, and natural gas).
Contact & resources
- Contact email
- bustax@state.vt.us
Please verify current program details with the administering agency before making any financial decisions.
