Partial Sales and Use Tax Exemption for Agricultural Solar Power Facilities

March 16, 2023


California provides a partial exemption of the state's sales and use tax for farm equipment and machinery. The exemption only applies to taxes levied by the State, and not sales and use taxes levied by local governments. Further, the exemption does not apply to the taxes imposed or administered pursuant to sections 6051.2 and 6201.2 of the Revenue and Taxation Code, the Bradley-Burns Uniform Local Sales and Use Tax Law, the Transactions and Use Tax Law, or section 35 of article XIII of the California Constitution.

The California State Board of Equalization issued a Special Notice in November 2012, clarifying that photovoltaic (PV) systems that are used to provide electricity to farm equipment and machinery may qualify for the partial exemption. For any farm equipment or machinery to qualify for the partial exemption, it must be used primarily in producing and harvesting agricultural products. "Primarily" means 50% or more of the time. In the case of PV, according to the Special Notice, 50% or more of the electricity produced by the system must be used to provide power to farm equipment and machinery. The system does not need to be directly connected to the equipment to qualify. The system can be connected to the local electrical grid and used to offset the farm's electrical use through a net metering arrangement with the local utility. Applicants will need to demonstrate, however, that the farm equipment annually consumes at least half of the amount of electricity annually produced by the PV system.

Leased equipment also qualifies for the partial exemption. For more information, including a sample Partial Exemption Certificate, can be found on the web site above.


Program Overview

Implementing Sector: State
Category: Financial Incentive
State: California
Incentive Type: Sales Tax Incentive
Web Site:
Administrator: California State Board of Equalization
Start Date:
Eligible Renewable/Other Technologies: Solar Photovoltaics
Incentive Amount: 100% of the taxes levied by the State. Local and district sales taxes will still apply.
Equipment Requirements: At least half of the electricity produced by the system must be used to power agricultural equipment.


Name: CA Revenue and Taxation Code § 6356.5
Name: 18 CCR § 1533.1


Name: Taxpayer Information
Address: P.O. Box 942879
Sacramento CA 94279
Phone: (800) 400-7115

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.