Are electricity sales taxable?

The two largest revenue streams from producing electricity through renewable sources are electricity sales and renewable energy certificates (REC). The sale of electricity is typically taxable except in states with exemptions. An exemption taxpayers should examine is whether electricity is at retail or for resale.

How will state taxes affect renewable generating companies?

This increase in renewable generating companies will have state tax implications. “States may impose several taxes on renewable generation companies, including income tax, franchise tax, capital stock tax, gross receipts tax, property taxes and sales and use taxes,” Wade and Herzberg wrote.

Which states exempt electricity from sales tax?

An exemption taxpayers should examine is whether electricity is at retail or for resale. For example, Pennsylvania and Texas exempt electricity sales from sales tax if it is used during the manufacturing process, and Pennsylvania exempts sales tax if electricity is purchased for residential use.

Does a bundled electricity sale qualify for a sales tax exemption?

If sold together in a bundled transaction, taxpayers should determine whether the electricity or REC is the true object of the transaction. Taxpayers with battery storage at their facility should determine whether storing and releasing electricity could qualify for a production exemption from sales tax.

Does Washington have a sales tax exemption for solar energy?

Washington also provides a sales tax exemption for solar energy system machinery and equipment under specific criteria. States generally treat electricity as tangible personal property for sales tax purposes and thus may provide for manufacturing exemptions.

Do electric vehicle batteries qualify for a sales tax exemption?

Taxpayers with battery storage at their facility should determine whether storing and releasing electricity could qualify for a production exemption from sales tax. This also applies for charging electric vehicle batteries.