Connecticut Renewable Energy Sales Tax Exemption and Credits

Connecticut’s renewable energy sales tax exemption removes the state’s 6.35% sales and use tax from qualifying solar, geothermal, and ice storage cooling systems, and it covers the installation labor along with the equipment.¹ It has no sunset date and no annual cap. Homeowners, businesses, tenants, and the contractors buying on their behalf can all use it, but you have to claim it correctly at the point of sale by handing the seller Form CERT-140. If you skip that step and pay the tax, getting the money back is possible but awkward.

What Equipment Qualifies

The exemption sits in Conn. Gen. Stat. § 12-412(117). Subsection (A) is the part most buyers use. It exempts:¹

Solar electricity generating systems, including photovoltaic panels, inverters, and racking
Solar water and space heating systems, both passive and active, including specialized piping and heat exchangers
Geothermal resource systems, including ground-source heat pumps and loop piping
Equipment that is part of or directly connected to any of the above

A separate provision, Section 12-412(118), exempts ice storage cooling systems that make ice during off-peak hours for later air conditioning use. Only utility customers billed on a time-of-service metering basis can claim it; if you’re on a flat rate, the purchase is taxable.² 3

Wind is treated differently. Wind power generating equipment appears in subsection (B), which exempts machinery and materials “used directly in the renewable energy and clean energy technology industries” — meaning manufacturers, developers, and companies producing the technology, not an individual homeowner buying a small turbine.⁴ If you’re considering a residential wind system, ask the Department of Revenue Services in writing before assuming the exemption applies.

Installation Labor Is Included

This part surprises people. The exemption reaches past the hardware to the labor of installing qualifying solar, geothermal, and ice storage systems.⁵ The statute references the installation services described in Conn. Gen. Stat. § 12-407(a)(37)(I).⁶ On a $25,000 solar job, labor is often a large chunk of the invoice, and 6.35% off that labor is real money. When you fill out the exemption certificate, describe both the equipment and the installation services.

Who Can Claim It

The exemption is available to contractors, property owners, and tenants alike.⁶ That covers:

Homeowners buying a rooftop solar array or a geothermal heat pump for their own property
Businesses and commercial property owners installing qualifying systems on their buildings
Contractors purchasing equipment on behalf of a client for a qualifying installation
Tenants who install qualifying systems with the landlord’s permission

A contractor claiming the exemption is buying for a specific qualifying project. The certificate asks for the installation address when it’s known at the time of purchase.⁶

How to Claim the Exemption With Form CERT-140

You claim the exemption at the register, not later on a tax return. Present a completed Form CERT-140 to the seller before or at the time of purchase. The seller keeps it in their records as proof the sale was legitimately tax-free; you do not send it to the state.⁶ The form is available from the Department of Revenue Services website.

You’ll fill in:

Your name, address, and Connecticut tax registration number if you have one, plus federal EIN if applicable
The seller’s name, address, and Connecticut tax registration number
Whether this is a one-time purchase or a blanket certificate covering ongoing purchases from that vendor
A specific description of each item, with checkboxes for the system type
The installation address, if known

Be specific in the item description. “Solar equipment” is the kind of entry that draws questions in an audit. “Twenty photovoltaic panels, one string inverter, and aluminum roof-mount racking” tells the seller and any later auditor exactly what was exempted and why.

The signature line is not a formality. You’re certifying under penalty of law that the information is accurate. A deliberately false certificate can bring a fine of up to $5,000, imprisonment for up to five years, or both.⁶

Getting a Refund If You Already Paid the Tax

If you paid Connecticut sales tax on a qualifying purchase because you didn’t know about the exemption or forgot the certificate, the money is recoverable, but the process runs through the retailer rather than around them.

You need the seller to complete Form AU-524, “Assignment of Retailer’s Rights for Refund.” On that form the retailer confirms they collected the tax, remitted it to the state, and are assigning the refund right to you. The Department of Revenue Services will not process a purchaser’s refund claim without a completed AU-524 from the retailer attached.⁷ You’ll also need a completed CERT-140 and your receipts to show the purchase qualified.

Tracking down a retailer weeks or months after the sale is where most refund attempts stall, especially with online sellers or national chains. Filing CERT-140 up front is far easier.

What the Exemption Does Not Cover

Some purchases people assume are covered aren’t.

Standalone battery storage is not listed in Section 12-412(117). The statute names solar electricity generating systems, solar heating systems, and geothermal systems, and batteries are not mentioned. A battery sold as part of an integrated solar system may fit within “equipment related to such systems,” but a standalone home battery purchased on its own is a gray area. Ask the Department of Revenue Services in writing before relying on the exemption.

General electrical work that isn’t specific to the renewable energy system, such as a main panel upgrade done to accommodate solar, may not qualify. The exemption covers the systems and equipment related to them, not every home improvement a solar project happens to trigger.

The industry-side exemption in subsection (B) is narrower than it looks. Items must be used “predominantly” — more than 50% of the time — in the production, improvement, or development of renewable energy technology.⁴ Equipment used mostly for other work fails the test, and equipment used for general administration and management is excluded outright, even at a clean energy company.

How It Stacks With Federal Credits in 2026

Connecticut’s exemption is a state benefit, and the federal picture around it has changed. The federal Residential Clean Energy Credit under Section 25D, which covered 30% of the cost of a home solar or geothermal system, is not available for property placed in service after December 31, 2025.⁸ If your system was placed in service by that date, you can still claim the credit on your 2025 return. New residential installations completed in 2026 no longer qualify. That makes the state sales tax exemption a larger share of the remaining financial help for homeowners.

On the commercial side, the federal Investment Tax Credit is still available. The base rate is 6% of qualified expenditures, rising to 30% for projects that meet prevailing wage and apprenticeship requirements, with the full credit available for projects placed in service through the end of 2027. A Connecticut business can pair that federal credit with the state sales tax exemption on the same installation.

1
Justia. Connecticut Code 12-412 – Exemptions
2
Justia. Connecticut Code 12-412 – Exemptions
3
Connecticut State Department of Revenue Services. SN 2007(7), 2007 Legislation Granting a Connecticut Sales and Use Tax Exemption
4
Connecticut State Department of Revenue Services. SN 2010(9.1), Exemption From Sales and Use Taxes for Items Used Directly in the Renewable Energy and Clean Energy Technology Industries
5
Database of State Incentives for Renewables & Efficiency. Sales and Use Tax Exemption for Solar and Geothermal Systems
6
Connecticut Department of Revenue Services. CERT-140 – Solar Heating Systems, Solar Electricity Generating Systems, and Ice Storage Cooling Systems
7
Connecticut State Department of Revenue Services. PS 98(5), Sales and Use Tax Refund Policy
8
Internal Revenue Service. Residential Clean Energy Credit