Sales Tax Exemption - Machinery for New and Expanded Industry

This exemption is aimed at commercial and similar solar projects that sell the electricity they produce, so it generally does not apply to a home system that powers the house itself. Systems built to generate power for on-site use do not qualify. Contact the Kentucky Department of Revenue to confirm whether your situation could be covered.

Solar components directly involved in producing electricity for sale may be exempt from Kentucky sales and use tax, which can lower project costs for commercial customers. Items not directly involved in generation, such as distribution lines, transformers, and battery storage, are not covered, and systems serving on-site use do not qualify. Confirm specific project eligibility and documentation requirements with the Kentucky Department of Revenue.

This is a sales and use tax exemption for machinery for new and expanded industry, which the Kentucky Department of Revenue clarified in 2021 guidance as applicable to solar energy systems. It covers solar components directly involved in generating electricity for sale, and excludes distribution lines, transformers, battery storage, and systems producing power for on-site use. It targets commercial and federal government sector solar photovoltaic projects.