Solar and Wind Energy Device Franchise Tax Deduction
Administered by Comptroller of Public Accounts
This program does not apply to homeowners—it is exclusively for commercial and industrial businesses in Texas that install solar or wind energy systems. Eligible businesses can deduct either the full system cost from taxable capital or 10% of the system cost from taxable income when calculating franchise tax liability.
You can market solar thermal (heating and cooling), solar photovoltaics, and wind systems to Texas commercial and industrial clients as franchise-tax-deductible investments. Manufacturers, sellers, and installers of these systems also qualify for a separate franchise tax exemption, reducing the tax burden of your business under Texas's corporate-equivalent franchise tax.
This franchise tax deduction allows Texas corporations to reduce franchise tax liability through either a full-cost deduction against taxable capital or a 10%-of-cost deduction against taxable income. The program targets commercial and industrial sectors installing solar thermal or wind systems; it also exempts manufacturers, sellers, and installers of these technologies from franchise tax. Administration occurs through standard franchise tax reporting with no separate application process beyond normal tax filing.
Program details
- Program ID
- 81
- Effective
- 1/26/1982
- Last updated
- 3/21/2026
Eligibility
- Sectors
- commercial industrial
- Technologies
- solar water heat solar space heat solar thermal electric solar thermal process heat solar photovoltaics wind (all)
Program summary
Texas allows a corporation to deduct the cost of a solar energy device from the franchise tax in one of two ways:
- The total cost of the system may be deducted from the company's taxable capital or,
- 10% of the system's cost may be deducted from the company's income.
Both taxable capital and a company's income are taxed under the franchise tax, which is Texas's equivalent to a corporate tax.
For the purposes of this deduction, a solar energy device means "a system or series of mechanisms designed primarily to provide heating or cooling or to produce electrical or mechanical power by collecting and transferring solar-generated energy. The term includes a mechanical or chemical device that has the ability to store solar-generated energy for use in heating or cooling or in the production of power." Under this definition wind energy is also included as an eligible technology.
Texas also offers a franchise tax exemption for manufacturers, seller, or installers of solar energy systems which also includes wind energy as an eligible technology.
Contact & resources
- Contact email
- pam.groce@cpa.state.tx.us
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
