Sales and Use Tax Exemption for Renewable Energy Equipment

March 24, 2023


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.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: Colorado
Incentive Type: Sales Tax Incentive
Web Site:
Start Date: 7/1/2009
Eligible Renewable/Other Technologies:
  • Geothermal Electric
  • Solar Photovoltaics
  • Wind (All)
  • Biomass
  • Geothermal Heat Pumps
  • Heat pumps
  • Wind (Small)
  • Anaerobic Digestion
  • Lithium-ion
Incentive Amount: 100%


Name: C.R.S. 39-26-724
Name: C.R.S. 29-2-105


Name: Taxpayer Service Division
Organization: Colorado Department of Revenue
Address: 1375 Sherman St.
Denver CO 80261
Phone: (303) 238-7378

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.