Partial Sales and Use Tax Exemption for Agricultural Solar Power Facilities
Administered by California State Board of Equalization
California exempts the state portion of sales and use tax on solar photovoltaic systems installed on your farm if at least 50% of the electricity produced powers your farm equipment and machinery annually. You can connect the system to the grid and use net metering; you just need to demonstrate that your farm equipment consumes at least half the system's annual output. To apply, you'll need to provide documentation showing this usage ratio and submit a Partial Exemption Certificate to the seller at time of purchase.
This tax exemption applies only to the state-level sales tax portion—not local taxes or specific tax types under California Revenue and Taxation Code sections 6051.2 and 6201.2, the Bradley-Burns Law, or Transactions and Use Tax Law. The system must be designed so that 50% or more of its annual electricity production serves the customer's farm equipment and machinery, whether directly connected or grid-tied. Help customers document annual equipment consumption to support their exemption claim and provide them with the sample Partial Exemption Certificate from the California State Board of Equalization.
This program provides a state-level sales and use tax exemption for PV systems serving agricultural operations, explicitly excluding local tax portions and certain statutory tax types. The requirement is that 50% or more of annual PV output must power farm equipment and machinery; systems may be grid-connected with net metering if annual farm equipment consumption matches at least half the system's output. Target compliance through the Partial Exemption Certificate process at point of sale, and refer applicants to the State Board of Equalization's Special Notice (November 2012) and associated guidance materials for qualification details.
Program details
- Program ID
- 5351
- Last updated
- 9/4/2026
Eligibility
- Sectors
- agricultural
- Technologies
- solar photovoltaics
Program summary
California provides a partial exemption of the state's sales and use tax for farm equipment and machinery. The exemption only applies to taxes levied by the State, and not sales and use taxes levied by local governments. Further, the exemption does not apply to the taxes imposed or administered pursuant to sections 6051.2 and 6201.2 of the Revenue and Taxation Code, the Bradley-Burns Uniform Local Sales and Use Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the California Constitution.
The California State Board of Equalization issued a Special Notice in November 2012, clarifying that photovoltaic (PV) systems that are used to provide electricity to farm equipment and machinery may qualify for the partial exemption. For any farm equipment or machinery to qualify for the partial exemption, it must be used primarily in producing and harvesting agricultural products. "Primarily" means 50% or more of the time. In the case of PV, according to the Special Notice, 50% or more of the electricity produced by the system must be used to provide power to farm equipment and machinery. The system does not need to be directly connected to the equipment to qualify. The system can be connected to the local electrical grid and used to offset the farm's electrical use through a net metering arrangement with the local utility. Applicants will need to demonstrate, however, that the farm equipment annually consumes at least half of the amount of electricity annually produced by the PV system.
Leased equipment also qualifies for the partial exemption. For more information, including a sample Partial Exemption Certificate, can be found on the web site above.
Contact & resources
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
