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Sales and Use Tax Exemption for Renewable Energy Equipment

Eligibility 
Commercial
Industrial
Local Government
Nonprofit
Residential
State Government
Retail Supplier
Agricultural
Institutional
Savings Category 
Solar Water Heat
Solar Space Heat
Geothermal Electric
Solar Thermal Electric
Solar Thermal Process Heat
Solar Photovoltaics
Wind (All)
Biomass
Wind (Small)
Anaerobic Digestion
Program Info
Sector Name 
State
State 
Colorado
Program Type 
Sales Tax Incentive
Rebate Amount 

100%

Summary 

Colorado exempts from the state's sales and use tax all sales, storage, and use of components used in the production of alternating current electricity from a renewable energy source for fiscal years beginning on or after July 1, 2006. The exemption for systems which produce electricity from a renewable resource includes, but is not limited to, photovoltaic (PV) systems, solar thermal-electric systems, small wind systems, biomass systems, or geothermal systems.

Effective July 1, 2009, through July 1, 2017, all sales, storage, and use of components used in solar thermal systems are exempt from the state's sales and use tax.  Effective May 5, 2014, through July 1, 2019, all sales, storage, and use of components used in biogas production systems are exempt from the state's sales and use tax (see H.B. 1159).

System Components Exempt from Taxation

Eligible components include, but are not limited to, wind turbine generators, rotors and blades, solar modules, trackers, supporting structures or racks, inverters, towers and foundations, plus balance of system components such as wiring, control systems, switchgears, and generator step-up transformers. Also exempt are concentrating solar power components that include, but are not limited to: mirrors, plumbing, and heat exchangers.

Ineligible components include any components beyond the step-up transformers located at the production site, labor, energy storage devices, or remote monitoring systems. 


Local Option -- Sales and Use Tax Exemption

The exemption only applies to state sales and use taxes  not to sales and use taxes assessed by incorporated towns, cities, and counties. However, Colorado has granted local jurisdictions the authority to exempt renewable energy equipment from sales and use taxes if a local government chooses to do so.