The Texas solar property tax exemption keeps the value your solar panels add to your home or business off the tax roll. Under Texas Tax Code Section 11.27, the portion of a property’s appraised value attributable to a qualifying solar energy device is fully exempt from property tax. You claim it by filing a short application with your county appraisal district, and once it’s granted you generally don’t have to reapply year after year.
What the Exemption Actually Does
The exemption isolates the value your solar installation adds and removes that amount from your taxable value. If your home appraised at $350,000 before the panels went up and the appraisal district concludes the array adds $30,000, you continue to be taxed on $350,000 rather than $380,000.
It does not lower your tax bill below where it was before the install. If land values rise or the appraisal district raises your underlying value for other reasons, your taxes can still go up. The exemption only neutralizes what the panels themselves contribute.
What Equipment Qualifies
Texas defines a solar energy device broadly: any apparatus designed to convert sunlight into thermal, mechanical, or electrical energy, plus equipment that stores or distributes that converted energy. For a typical residential system, that covers the panels, inverter, wiring, and any connected battery storage.
There is one meaningful limit. The device must be primarily for producing and distributing energy for on-site use. A homeowner offsetting their own electric bill clearly qualifies. A utility-scale solar farm selling wholesale power to the grid does not. A rooftop system that occasionally sends surplus electricity back to the grid still meets the on-site-use standard.
Who Claims It If You Lease
The statute creates two related exemptions. Subsection (a) exempts the increase in the real property’s appraised value caused by the installation. Subsection (a-1) exempts the solar device itself from being taxed as personal property, and that exemption belongs to whoever owns the device, even if they don’t own the land.
If you own both the home and the panels, both provisions help you. The house isn’t appraised higher because of the panels, and the panels aren’t taxed as personal property.
If you lease the panels or use a power purchase agreement, the device is owned by the third-party company, and that company is the party eligible to claim the device-value exemption under (a-1). Any increase in your real property’s appraised value from the installation is still exempt under (a) regardless of who owns the equipment.
How to Apply
File Texas Comptroller Form 50-123, “Exemption Application for Solar or Wind-Powered Energy Devices,” with the appraisal district in each county where the property sits.
The form asks for:
- Your name, driver’s license or Social Security number, address, and contact information
- A description of the device, its physical location, how many devices, and your appraisal district account number if you know it
- Photographs and invoices for the device, installation, and construction, if you have them
You don’t have to supply the system’s kilowatt rating, panel model numbers, or a labor breakdown. Photos and invoices are requested but marked optional. If the system is classified as business personal property, attach a copy of your property rendition. A false statement on the application is a criminal offense under Texas Penal Code Section 37.10.
Filing Deadline
File between January 1 and April 30 of the tax year you want the exemption to apply to. Miss that window and you generally can’t get the exemption for that year.
There is limited relief. For good cause shown, the chief appraiser may grant a written extension of up to 60 days past April 30. The statute doesn’t define good cause, but medical emergencies, natural disasters, and similar circumstances that prevented a timely filing are typical reasons appraisal districts accept.
If you just bought a property that already has a qualifying installation, you have until the first anniversary of the purchase date to apply for the applicable portion of that tax year.
After You File
The chief appraiser reviews the application to confirm the installation qualifies under Section 11.27. If more information is needed, you’ll get a written request and have 30 days to respond. The chief appraiser can extend that response window once by up to 15 days. If you don’t provide what was asked, the application is denied.
Once granted, the exemption stays in effect without annual reapplication, unless the chief appraiser specifically requires you to reapply or you add equipment that wasn’t on the original application. If you expand the system or put panels on a different structure, file a new Form 50-123 covering the added equipment.
If Your Application Is Denied
You can protest a denial to the local Appraisal Review Board. The deadline is May 15 or 30 days after the notice of determination was delivered to you, whichever is later. If that date lands on a weekend or holiday, it moves to the next business day.
At the hearing, bring your invoices, system specifications, photos, and anything showing the system is primarily for on-site energy use. The ARB is an independent panel of local citizens that resolves disputes between property owners and the appraisal district. If the ARB rules against you, you can appeal further to district court.
Sales Tax and the Federal Credit
Two related points often come up alongside the property tax exemption. On sales tax, the panels and the inverters that convert direct current to alternating current qualify as manufacturing equipment and are exempt from state sales tax, but the mounting hardware, racking, and support structures are not. Ask your installer for an itemized quote so sales tax is applied only to the non-exempt components.
On the federal side, the Residential Clean Energy Credit under 26 U.S.C. ยง 25D, which gave a 30 percent income tax credit on qualifying installations, was terminated by federal legislation enacted in 2025 for any expenditures made after December 31, 2025. Systems placed in service in 2026 or later don’t qualify. If you installed before then and couldn’t use the full credit in the year of installation, you may still be able to carry the remainder forward on future returns. With that credit gone, the Section 11.27 property tax exemption is one of the few remaining incentives that directly reduces the ongoing cost of owning a solar system in Texas.