Renewable Energy Equipment Exemption

December 04, 2023


Iowa allows a sales tax exemption for solar, wind, and hydroelectricity equipment. As of July 2023, the Iowa sales tax rate is 6%.


For wind energy, the exemption includes the total cost of wind energy equipment and all materials used to manufacture, install, or construct wind energy systems. The exemption does not apply to equipment used to construct a plant to manufacture wind energy systems.


Effective July 1, 2006, solar energy equipment is also exempt from the state sales tax. Solar equipment means any equipment that is used to convert incident solar radiation to energy, or equipment used to transform the converted energy to storage or to some point of use.

Additional guidance on the solar exemption has been provided in the Iowa Sales and Use Tax Guide: "Iowa Code section 423.3(90) defines solar energy equipment as “equipment that is primarily used to collect and convert incident solar radiation into thermal, mechanical, or electrical energy or equipment that is primarily used to transform such converted solar energy to a storage point or to a point of use.” This includes but is not limited to panels, inverters, solar roof tiles or shingles, and energy transmission devices. It does not include a battery or other storage point, equipment used for safety or security of the equipment such as fencing, or equipment not used to collect, convert, or transmit solar energy. It also does not include materials used to manufacture, install, or construct solar energy equipment, such as racking to install or mount solar energy equipment or pads or foundations to support a solar energy equipment installation."


In May 2013 a sales tax exemption was also added for hydroelectricity conversion equipment through the enactment of H.F. 630. This includes but is not limited to, generators, turbines, powerhouses, intakes, coffer dams, walls, water conduits, tailraces, other concrete components, electric equipment substations, poles, wires, transformers, breakers, and switches used to convert water, water power, or hydroelectricity to a form of usable energy.

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: Iowa
Incentive Type: Sales Tax Incentive
Web Site:
Administrator: Iowa Department of Revenue
Start Date:
Eligible Renewable/Other Technologies:
  • Solar Water Heat
  • Solar Space Heat
  • Solar Thermal Electric
  • Solar Thermal Process Heat
  • Solar Photovoltaics
  • Wind (All)
  • Hydroelectric
  • Solar Pool Heating
  • Wind (Small)
  • Hydroelectric (Small)
Incentive Amount: 100% of sales tax
Maximum Incentive: None


Name: Iowa Code § 423.3
Date Enacted: 05/26/1993 (subsequently recodified, amended)


Name: Taxpayer Services - DOR
Organization: Iowa Department of Revenue
Address: Hoover Building, Taxpayer Services
Des Moines IA 50319
Phone: (515) 281-3114

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.