Sales Tax Credit for Clean Energy Technology
Administered by Tennessee Department of Revenue
This Tennessee sales tax incentive is aimed at commercial and industrial taxpayers, so it generally is not designed for residential homeowners. Eligible businesses can get a credit, a refund of sales tax paid, or authority to buy qualifying machinery and equipment tax-exempt for a certified clean energy electricity facility. Contact the Tennessee Department of Environment and Conservation to confirm whether your project qualifies.
Your commercial and industrial customers can avoid or recover sales tax on machinery and equipment for certified clean energy facilities using solar, wind, geothermal, hydrogen, nuclear, paired storage, or natural gas CHP. You must file your own application with the department and attach a copy of the contract, and your customer must also file an application. If both are approved, tax-exempt purchasing authority is extended to you for the described project.
Under Tenn. Code Ann. Section 67-6-346, taxpayers may take a credit, seek a refund of taxes paid, or obtain authority to make tax-exempt purchases of machinery and equipment for a facility certified by the Department of Environment and Conservation as generating electricity for on- and off-site use with clean energy technology. Both the contractor and the taxpayer must submit applications, with the contract attached to the contractor's, and approval of both extends tax-exempt purchase authority to the contractor for the specific project. If tax was already paid, the approved application supports a refund or credit to the taxpayer, and the program targets commercial and industrial sectors.
Program details
- Program ID
- 4919
- Effective
- 6/30/2010
- Last updated
- 1/2/2026
Eligibility
- Sectors
- commercial industrial
- Technologies
- geothermal electric solar photovoltaics wind (all) biomass hydrogen combined heat & power wind (small) lithium-ion
Program summary
Tenn. Code Ann. Section 67-6-346 allows a taxpayer to take a credit, apply for a refund of taxes paid, or to apply for authority to make tax-exempt purchases of machinery and equipment used to produce electricity in a certified green energy production facility. A certified green energy production facility is a facility certified by the Department of Environment and Conservation as producing electricity for use and consumption on and off the premises using clean energy technology. Clean energy technology is a technology used to generate electricity from geothermal, hydrogen, solar, nuclear, or wind sources, and includes storage paired with these technology types. CHP facilities utilizing natural gas for heat production and electricity for on-site consumption are also included.
A contractor who is installing pollution control or green energy machinery and equipment must file an application with the department and must attach a copy of the contract to its application. The taxpayer who hires a contractor must also file an application with the department. If both applications are approved, the authority to purchase tax-exempt will be extended to the contractor for the certified green energy production facility project described in the application. If taxes have been paid, the approved application will be used to support a refund or credit directly to the taxpayer.
Contact & resources
- Contact email
- heather.weldon@tn.gov
Please verify current program details with the administering agency before making any financial decisions.
