Manufacturing solar energy systems and components of solar energy systems

Manufacturing

Businesses that manufacture or process for hire solar energy systems that use photovoltaic modules or stirling converters are taxable at a preferential rate under the Manufacturing of Solar Energy business and occupation (B&O) tax classification.

Businesses that manufacture or process for hire solar grade silicon, silicon solar wafers, silicon solar cells, thin film solar devices, or compound semiconductor solar wafers that are used exclusively as components of the solar energy systems above are also taxable under the Manufacturing of Solar Energy B&O tax classification.

Note: The preferential tax rate expires July 1, 2032. The activity will then be taxable under the standard manufacturing B&O tax rate.

Selling

Manufacturers of solar energy systems that use photovoltaic modules, stirling converters, or the specific components listed above who sell their products at wholesale are taxable under the Wholesaling of Solar Energy B&O tax classification at a preferential rate.

Note: The preferential tax rate expires July 1, 2032. The activity will then be taxable under standard wholesaling B&O tax rate.

Manufacturers of solar energy systems and their components who sell their products to consumers are taxable under the Retailing B&O and Retail Sales tax classifications.

Businesses that deliver solar energy systems or their components to customers outside of Washington may take an Interstate and Foreign Sales deduction from the following classifications:

• Wholesaling of Solar Energy.
• Retailing.
• Retail Sales.

Multiple Activities Tax Credit (MATC)

Businesses that perform more than one taxable activity for the same product will report each activity under the proper classification and then take the MATC so that B&O tax is only paid once.

For more information, please see the MATC section of this guide.

Reporting/documentation requirements

Businesses that report under the preferential tax rates must file an Annual Tax Performance Report by May 31 of each year following a year when they claim the preferential rate. This requirement will not apply when the preferential rates expire.

Additional resources

Renewable energy/green incentives