Sales and Use Tax Exemption for Renewable Energy Equipment
Administered by Comptroller of Maryland
Maryland exempts eligible solar and geothermal equipment from state sales and use tax, so you avoid paying sales tax when you buy it. Qualifying items include solar equipment that heats or cools a home, makes electricity, or heats water (including systems that feed the grid), ground-loop geothermal heating and cooling, and residential wind turbines that power your home. Solar pool heating and possibly passive solar materials do not qualify, so check with the state's tax agency before buying.
Customers can buy eligible solar, geothermal ground-loop, and residential wind equipment without Maryland sales and use tax, which lowers their upfront system cost. Solar equipment must heat or cool a structure, generate electricity for a structure (including grid-supplying systems such as net metered ones), or provide hot water, while equipment in non-solar systems or tied to recreational facilities is excluded. Solar pool heating and possibly passive solar materials are not eligible, and wind eligibility is limited to residential property installations.
This is a state sales and use tax exemption created by legislation in April 2008 and expanded in May 2009 by H.B. 1171 (residential wind) and S.B. 621 (grid-supplying solar), effective July 1, 2009. It covers solar water heating, space heating, solar electric and PV, ground-loop geothermal heat pumps, and small residential wind, and it is open to residential, commercial, industrial, and agricultural sectors. It works as foregone tax revenue at the point of sale rather than a funded rebate, with definitions that exclude non-solar systems and recreational storage uses such as pool heating.
Program details
- Program ID
- 2928
- Last updated
- 1/6/2025
Eligibility
- Sectors
- commercial industrial residential agricultural
- Technologies
- solar water heat solar space heat solar thermal electric solar photovoltaics geothermal heat pumps wind (small)
Program summary
In April 2008, the Maryland enacted legislation exempting geothermal and solar energy equipment from the state sales and use tax. Geothermal equipment is defined as "equipment that uses ground loop technology to heat and cool a structure". Solar energy equipment is defined as "equipment that uses solar energy to heat or cool a structure, generate electricity to be used in a structure, or provide hot water for use in a structure". Solar energy equipment does not include "equipment that is part of a non-solar energy system or that uses any type of recreational facility or equipment as a storage medium". These distinctions appear to indicate that solar pool heating equipment, and possibly passive solar materials, are not eligible for the exemption.
Two pieces of legislation expanding the sales tax exemption were enacted in May 2009. H.B. 1171 added residential wind energy equipment as eligible for this incentive. Residential wind energy equipment is equipment installed on a residential property that uses wind energy to generate electricity for use in a residential structure on that property. S.B. 621 revised the definition of solar energy equipment to include systems that supply electricity to the grid (e.g., through a net metering agreement). The amendments contained in both laws took effect July 1, 2009.
Contact & resources
- Contact email
- david.stjean1@maryland.gov
Please verify current program details with the administering agency before making any financial decisions.
