Renewable Energy Property Tax Exemption
Administered by Massachusetts Department of Revenue
Your solar, wind, or qualifying fuel cell system may be exempt from local property tax for 20 years if it produces no more than 125% of your property's annual energy needs and has a capacity of 25 kW or less. To claim this exemption, contact your local tax assessor to understand how your county interprets the law—interpretations vary by location—and work with them to apply; some municipalities may require a payment-in-lieu-of-taxes agreement.
You can help residential, commercial, agricultural, and industrial customers reduce their ownership costs by installing solar thermal, solar PV, wind, hydroelectric, or fuel cell systems that qualify for Massachusetts' 20-year property tax exemption when system capacity is 25 kW or less and annual production does not exceed 125% of the property's needs. Verify with the local tax assessor's office that the customer's system qualifies, as interpretation of the exemption varies by county.
This property tax incentive exempts solar, wind, hydroelectric, and fuel cell systems from local assessment for 20 years when they meet capacity and production thresholds (≤25 kW or ≤125% of annual energy needs); hydropower requires a payment-in-lieu-of-taxes agreement of at least 5% of gross income. The exemption applies only to value added by the system, not the full property tax bill, and is administered locally by municipal tax assessors whose interpretations may differ across counties. Fuel cells must enter service after January 1, 2020, and serve as primary or auxiliary power.
Program details
- Program ID
- 146
- Effective
- 1/26/1975
- Last updated
- 1/6/2026
Eligibility
- Sectors
- commercial industrial residential agricultural
- Technologies
- solar water heat solar space heat solar thermal electric solar photovoltaics wind (all) hydroelectric wind (small) fuel cells using renewable fuels lithium-ion
Program summary
Massachusetts law provides that solar energy systems and wind energy systems or solar and wind systems that are co-located with an energy storage system that meet the following criteria are exempt from local property tax for a 20-year period: can produce at most 125% of the annual electricity needs of the real property; has a system capacity that is 25 kW or less; or an individual system -- or a combination therein -- that entered into an agreement for payment in lieu of taxes associated with the municipality that the system is located in. A period greater than 20 years may be allowed upon a written agreement between the municipality and the owner of the solar or wind energy system.* Solar, wind, or energy systems owned by a distribution or electric company are not included in the exemption.
Hydropower facilities are also exempt from local property tax for a 20-year period if a system owner enters into an agreement with the city or town to make a payment (in lieu of taxes) of at least 5% of its gross income in the preceding calendar year.
Qualified fuel cell-powered systems built after January 1, 2020, capable of producing -- without combustion -- not more than 125% of the annual energy needs for the real property, are also tax exempt. Fuel cells must be utilized as the primary or auxiliary power system for the real property.
This incentive applies only to the value added to a property by an eligible system. It does not constitute an exemption for the full amount of the property tax bill.
See the Division of Local Services Information Guideline Release to learn more.
* Massachusetts' property tax exemption statute includes language that may be interpreted differently from county to county. Check with your county's tax assessors to learn how this exemption is interpreted in your county.
Contact & resources
- Contact email
- dwayne.breger@state.ma.us
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
