Sales and Use Tax Exemption for Residential Solar and Wind Electricity Sales

If you buy electricity from a solar or small wind system on your home under a power purchase agreement, Maryland does not charge sales and use tax on that electricity, just as with power bought from the grid. The home must be owned by a net metering eligible customer-generator and the electricity must be for residential use. Ask your PPA provider to confirm the exemption is reflected in your bill, or contact the Maryland Public Service Commission or state tax authority with questions.

Residential customers buying electricity under your solar or small wind retail PPAs are exempt from Maryland sales and use tax, so your offer is priced on equal footing with utility power. To qualify, the electricity must be sold for residential use on property owned by a net metering eligible customer-generator. The exemption has been in effect since July 1, 2011, so structure customer contracts and billing to reflect no tax on qualifying sales.

This is a sales and use tax exemption enacted in May 2011 and effective July 1, 2011, covering sales of electricity from qualifying solar and residential wind equipment to residential customers. It extends the existing exemption for energy sold under residential rate schedules on file with the Maryland PSC to retail PPAs, creating parity with grid electricity. It targets residential customer-generators eligible for net metering who use third-party owned solar or small wind systems, and it works as a forgone tax on sales rather than a funded rebate or grant.