Ohio Solar Equipment Sales Tax Exemption

Ohio's sales tax exemption for solar energy equipment removes the state's 5.75% base sales tax from qualifying photovoltaic and solar thermal hardware, reducing the upfront cost of a solar installation without requiring ongoing applications or annual filings. This page covers the statutory definition of the exemption, the mechanism through which it applies at point of sale, the scenarios in which it does and does not apply, and the boundaries that separate exempt equipment from taxable purchases. Understanding these distinctions matters for both residential and commercial buyers who want to accurately project system costs and avoid errors on purchase invoices.

Definition and scope

Ohio Revised Code §5739.02(B)(31) exempts from sales and use tax the sale of equipment used to generate electricity from solar energy. The exemption covers tangible personal property — meaning physical equipment — that becomes part of a qualifying solar energy system. Ohio's Department of Taxation administers the exemption and has issued guidance clarifying which component categories fall within its boundaries.

Exempt equipment includes solar photovoltaic panels, solar inverters, mounting structures directly integrated into the solar array, wiring and conduit that are part of the solar generating system, and solar thermal collectors used for water or space heating. Battery storage units receive exemption treatment when they are installed as an integral component of a solar generating system, though this boundary is subject to documentation requirements.

This exemption applies to the Ohio state sales tax rate of 5.75% (Ohio Department of Taxation, Sales & Use Tax) and also removes the applicable county surtax, which ranges from 0.25% to 2.25% depending on the county. A buyer in Cuyahoga County, for example, faces a combined rate of 8.00% — the full amount of which is relieved for qualifying equipment.

Scope limitations: This page covers only Ohio state and county sales tax treatment. It does not address federal tax treatment, income tax credits, property tax exemptions (addressed separately at Ohio Solar Property Tax Exemption), or exemptions in any other state. Systems installed outside Ohio's jurisdiction are not covered by Ohio Revised Code §5739.02(B)(31), even if the equipment is purchased from an Ohio vendor.

How it works

The exemption operates at point of sale. The buyer presents a completed Ohio Sales and Use Tax Blanket Exemption Certificate (Form STEC B) — or a single-transaction certificate (Form STEC U) — to the seller before the transaction is finalized. The seller then removes sales tax from the qualifying line items on the invoice.

The process follows these discrete steps:

1. Identify qualifying equipment. Before purchase, classify each component against the statutory definition in ORC §5739.02(B)(31). Panels, inverters, racking, and solar-specific wiring qualify. General electrical materials that would be installed in any construction project typically do not.
2. Complete the exemption certificate. The buyer fills out STEC B (for blanket/ongoing purchases from one vendor) or STEC U (for a single transaction), stating the reason for exemption as "equipment used to generate electricity from solar energy."
3. Submit the certificate to the seller. The certificate must be in the seller's possession at or before the time of sale. Retroactive claims require a separate refund process through the Ohio Department of Taxation.
4. Retain documentation. Both the seller and buyer should retain copies for a minimum of four years, consistent with Ohio's standard audit period for sales tax records.
5. Verify the invoice. The final invoice should show $0.00 tax on qualifying line items. Taxable non-qualifying items (tools, consumables, general construction materials) should appear as separate taxable lines.

For a broader picture of how solar systems are structured before selecting equipment, the conceptual overview of how Ohio solar energy systems work provides relevant background on system components.

Common scenarios

Residential installation: A homeowner purchases a rooftop PV system — panels, string inverter, mounting hardware, and system wiring — from a licensed Ohio solar installer. The installer, acting as the seller of equipment, applies the exemption certificate to all qualifying components. The homeowner pays no sales tax on those items. General roofing materials used to reseal penetrations are taxable.

Commercial ground-mount system: A business installs a 200 kW ground-mounted array. The racking system, all panels, and the central inverter are exempt. The concrete footings and earthwork are not equipment sales and are not covered by the exemption.

Battery storage add-on: A homeowner adds a 10 kWh battery storage system to an existing solar array. Because the battery is integrated into the solar generating system and its primary purpose is storage of solar-generated electricity, it qualifies under Ohio's exemption. A standalone battery purchased without a solar system connection presents a more ambiguous classification.

Solar thermal system: A farm installs flat-plate solar thermal collectors for water heating. The collectors, mounting hardware, and solar-specific plumbing components qualify. Standard plumbing fixtures that would appear in any non-solar installation do not.

For context on how different system types align with these scenarios, the regulatory context for Ohio solar energy systems outlines the administrative frameworks that govern each category, and the Ohio Solar Incentives and Tax Credits page details how this exemption interacts with other available incentives.

Decision boundaries

The line between exempt and taxable items requires precise classification. The table below contrasts equipment categories:

The central test applied by the Ohio Department of Taxation is whether the item is equipment used to generate electricity from solar energy or is a general construction or electrical component that happens to appear on a solar job. Items serving dual purposes — or items that would appear on a non-solar construction project — typically do not qualify.

The exemption does not apply to services. Labor charges for installation, system design fees, and permit-processing fees remain taxable. Only the tangible personal property component of a solar purchase is eligible. Buyers who receive a lump-sum contract covering both equipment and labor should request an itemized invoice to ensure the exemption is applied only to qualifying equipment values.

Use tax obligations arise when equipment is purchased from an out-of-state vendor who does not collect Ohio sales tax. In that case, the buyer owes Ohio use tax on non-exempt items. Qualifying solar equipment purchased from an out-of-state vendor is still exempt from use tax under the same ORC §5739.02(B)(31) provision — but documentation requirements remain identical.

The Ohio solar sales tax exemption is one of three principal cost-reduction mechanisms available at the state level, alongside the federal Investment Tax Credit and the Ohio property tax exemption for solar improvements. For a complete picture of system economics, the solar energy return on investment in Ohio analysis incorporates all three factors. For an orientation to the full range of Ohio solar topics, the site index provides a structured entry point.

References

• Ohio Revised Code §5739.02(B)(31) — Sales Tax Exemptions
• Ohio Department of Taxation — Sales and Use Tax
• Ohio Form STEC B — Sales and Use Tax Blanket Exemption Certificate
• Ohio Form STEC U — Sales and Use Tax Unit Exemption Certificate
• Ohio Department of Taxation — County Sales Tax Rates