Washington State Solar Sales Tax Exemption: Size Tiers and 2029 Deadline

The Washington State solar sales tax exemption waives state and local sales tax on qualifying solar energy systems and the labor to install them. Systems producing up to 100 kilowatts AC get a full 100 percent exemption at the point of sale. Systems larger than 100 but no more than 500 kilowatts AC get a 50 percent exemption, paid as a refund after the fact. Both tiers expire January 1, 2030, so installation must be completed by December 31, 2029.

What You Actually Save

Washington’s base state sales tax is 6.5 percent, and cities and counties layer their own taxes on top.¹ Combined rates around the state generally run between about 7.5 and 10.5 percent. On a $25,000 residential installation, that is roughly $1,875 to $2,625 you do not pay. On a $15,000 system, about $1,125 to $1,575. The exemption applies to the full invoice, hardware and installation labor, not just the equipment line.

What Qualifies

The statute covers machinery and equipment that is integral and necessary to generating electricity from solar. In practice that means solar panels, inverters, racking and mounting, wiring, switchgear, monitoring equipment, and the other balance-of-system parts, along with the professional labor for engineering, design, and installation.²

The statute defines “used directly” in generating electricity to include equipment that captures solar energy, converts it to electricity, and stores, transforms, or transmits that electricity for entry into or parallel operation with the grid. That language arguably reaches battery storage paired with solar, since the batteries store electricity the system generates. If batteries are part of your project and you want certainty, ask the Department of Revenue before you buy.

Several things are excluded even when they show up on the same job:

Buildings and non-generating building fixtures, including roofing materials, shingles, plywood, and structural reinforcements.
Property with a useful life under one year.
Repair and replacement parts that simply restore equipment to working order without improving efficiency or extending useful life.
Hand-powered tools used during installation.

Your system must produce at least 1,000 watts (one kilowatt) AC to qualify at all.

The Two Size Tiers

How you claim the exemption depends on the size of your system.

Up to 100 Kilowatts AC

A system that produces no more than 100 kilowatts AC gets a 100 percent exemption on state and local sales tax. This covers essentially all residential installations and many smaller commercial ones. The relief happens at the point of sale: the contractor does not charge tax on qualifying equipment and labor once you provide the exemption certificate.²

The installing contractor must hold a valid certificate of registration under Washington’s contractor registration law, carry industrial insurance, and have no findings of wage and hour violations.³

Over 100 and Up to 500 Kilowatts AC

Systems larger than 100 kilowatts but no more than 500 kilowatts qualify for a 50 percent exemption, and the mechanism is different. You pay the full sales tax at the time of purchase and then apply to the Department of Revenue for a refund of half. The project also has to be certified by the Department of Labor and Industries as meeting workforce standards that include prevailing wages, apprenticeship use, local hire preference, contracts with women-, minority-, or veteran-owned businesses, and a compliant wage-and-hour history. Good-faith efforts can substitute where qualified businesses or local workers were not available.²

Systems larger than 500 kilowatts do not qualify for either tier.

How to Claim It at the Point of Sale

For systems up to 100 kilowatts, everything happens on the paperwork with your installer. Complete the Buyer’s Retail Sales Tax Exemption Certificate, Form REV 27 0032, and give it to your solar contractor or equipment vendor before or during the purchase.⁴ The form lives on the Department of Revenue’s exemption forms page.⁵

On the certificate you provide your legal name, the seller’s name, and select the box for the solar energy system exemption. You also list the system’s total generation capacity in kilowatts AC, so having the system design plan and final contract in front of you keeps the technical detail accurate. The seller then leaves sales tax off your invoice and keeps a copy of the certificate on file for five years.⁶

If You Already Paid Sales Tax

If a contractor charged you sales tax on a qualifying solar purchase and no exemption certificate was presented at the time, you can still get the money back. File a refund application with the Department of Revenue through the My DOR portal.⁶ The application has to be submitted within the time limits in RCW 82.32.060, which generally allow four years from the date the tax was paid.

For the 100-to-500-kilowatt tier, the refund path is not a fallback. It is how the exemption is designed to work: you pay tax at the register and file for the 50 percent remittance after Labor and Industries certifies the workforce standards were met.

The 2029 Deadline

Both the sales tax exemption under RCW 82.08.962 and the parallel use tax exemption under RCW 82.12.962 expire January 1, 2030. To qualify, installation must be completed by December 31, 2029.² The word matters. Starting the project before the deadline is not enough if the system is not operational by that date. For the 100-to-500-kilowatt tier, the statute specifies that installation must both commence and be completed within the eligible window.³

Whether the legislature extends the exemption past 2029 is not known. Contractor backlogs and supply delays late in the window can push completion past the cutoff, so treating the deadline as tighter than it looks is the safer read.

What This Exemption Does Not Cover

A few adjacent costs and incentives sit outside this exemption, and it is worth knowing where the edges are.

Local building and electrical permit fees are set by your city or county and are not covered. Repair and replacement parts that only restore equipment to working order are also outside the exemption, so inverter replacements and similar mid-life repairs are taxed at normal rates.²

The federal Residential Clean Energy Credit under Section 25D of the Internal Revenue Code, which paid a 30 percent credit on residential solar through 2025, does not apply to installations placed in service after December 31, 2025. The current statute states that no credit is available for expenditures made after that date.⁷ Systems purchased and placed in service before the end of 2025 can still claim the 30 percent credit for that tax year on IRS Form 5695.⁸ With that credit gone for later installations, the state sales tax exemption is now the primary tax incentive for Washington homeowners going solar.

Net metering, which lets systems up to 100 kilowatts earn bill credits for excess electricity sent back to the grid, is a separate program administered through your utility and does not affect the sales tax exemption in either direction.⁹

1
MRSC. Sales and Use Taxes
2
Washington State Legislature. RCW 82.08.962 – Exemptions – Solar Energy System Components
3
Washington State Legislature. RCW 82.12.962 – Exemptions – Use of Machinery and Equipment in Generating Electricity
4
Washington Department of Revenue. Buyers Retail Sales Tax Exemption Certificate
5
Washington Department of Revenue. Exemption Forms
6
Washington State Legislature. WAC 458-20-254
7
Office of the Law Revision Counsel. 26 USC 25D – Residential Clean Energy Credit
8
Internal Revenue Service. Instructions for Form 5695
9
Washington Utilities and Transportation Commission. Net Metering