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New York: Sales Tax Exemptions for Solar Energy Systems

  • Apr 9, 2013 | Gail Cole

 New York now allows a sales and use tax exemption for solar energy equipment and installation.

Pursuant to legislation enacted in December of 2012, New York now allows an exemption from sales and use tax “for receipts from the retail sales and installation of commercial solar energy systems equipment.” (New York Law Chapter 406). The exemption applies to both the 4% state sales and use tax and the 3.8% Metropolitan Commuter Transportation District (MCTD) sales and use tax. All New York State localities (both cities and counties) are permitted to extend the exemption to local sales and use taxes, although they are not required to do so.

New York has allowed a sales and use tax exemption “for the sale and installation of residential solar energy systems equipment” since September 1, 2005 (TSB-M-OF(11)S). Commercial solar energy systems may now benefit from the exemption, effective January 1, 2013.

Commercial solar energy systems equipment is defined as:

An arrangement or combination of components installed upon nonresidential premises that utilize solar radiation to produce energy designed to provide heating, cooling, hot water and/or electricity.

It does not include any equipment that is “part of a non-solar energy system.”

Nonresidential premises is defined as “any premises that does not meet the definition of residence” as defined in TSB-M-OF(11)S.

Contractors must submit a properly completed Form ST-120.1 when purchasing commercial solar energy systems.

Anyone other than a contractor who purchases either commercial solar energy systems equipment or installation services must submit a properly completed Form ST-121 to the contractor or vendor.

The following New York jurisdictions provide an exemption for commercial solar energy systems equipment, effective March 1, 2013:

  • Broome County;
  • Trompkins County (except Ithaca city); and
  • Ulster County.

The New York State Department of Taxation provides a complete list of jurisdictions that do not allow an exemption for commercial solar energy systems, effective March 1, 2013. These include, but are not limited to:

  • Albany County
  • Allegany County
  • Nassau County
  • New York City

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photo credit: Windwärts Energie GmbH via photopin cc

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.