Tennessee Solar Tax Credits, Incentives and Rebates (2024) – MarketWatch

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Tennessee offers two tax incentives for solar panel installations. All types of renewable energy equipment are eligible for a partial property tax exemption, and business-owned systems can also receive a sales tax credit.

There are no solar rebates in Tennessee as of 2024. The Tennessee Valley Authority (TVA) closed its Green Power Providers Program, which provided financial incentives for renewable energy, in 2019.

Green Energy Property Tax Assessment

Incentive value: Property taxes only account for 12.5% of solar panel system costs

Frequency: Annual tax exemption

Tennessee has a partial property tax exemption for solar power systems and other renewable energy sources. If you install solar panels, the state will only count 12.5% of your project costs as taxable property value.

For example, if you own a $300,000 home in Nashville and you install a home solar system worth $16,000, you will not be taxed for $316,000 worth of property. Instead, you only pay property taxes for 12.5% of solar installation costs, which equals $2,000 in this case. Assuming a 0.6% tax rate, your annual property taxes only increase by around $12.

Sales Tax Credit for Clean Energy Technology

Incentive value: Exempts business solar equipment from the state’s 7% sales tax

Frequency: Applied at the time of purchase

If you purchase a solar panel system for a business in Tennessee, you are not charged the state’s 7% sales tax. The sales tax exemption is not available for residential solar installations. However, it is available for business-related wind, geothermal and biomass systems.

For example, if you own a small business in Tennessee and install a 10 kW solar system worth $27,900, you will save $1,953 in sales tax at the time of purchase.

Tennessee Solar Easement and Access Laws

Incentive value: Varies; protects access to sunlight if you own solar panels

Frequency: Continuous

Tennessee has solar easement laws to ensure no construction blocks sunlight from reaching your property. Solar easements can have compensation clauses — if a planned construction would block your access to sunlight, you can negotiate with the developer in exchange for payment.

The Tennessee Office of Energy Programs has a solar easement agreement sample that you can review.

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