Sales Tax Exemption – Machinery for New and Expanded Industry

Kentucky offers a sales and use tax exemption for machinery for new and expanded industry. In 2021, the Kentucky Department of Revenue offered guidance on how this exemption may apply to solar energy systems.

According to the guidance, solar energy system components that are involved in the production of electricity for sale may be exempt from sales and use tax. The exemption would not apply to components not directly involved in electricity production, like distribution lines, transformers, and battery storage systems. The exemption would also only apply to solar energy systems that produce electricity for sale, rather than for on-site use.