Colorado · Tax exemption
CO Renewable Energy Sales Tax Exemption
Removes a tax burden residential solar owners in Colorado would otherwise carry -- see what it covers, eligibility, and payback impact below.
- Sales tax exemption
- stated benefit
- Residential
- eligible customers
- 12.3 yr
- Colorado baseline payback
- 4
- other Colorado programs
What it means
In Colorado, a 6 kW system already pays back in about 12.3 years on ~$1,368/year of modeled savings, and the CO Renewable Energy Sales Tax Exemption stacks on top of that, on top of any federal credit.
- Sales tax exem…
- stated benefit
- 12.3 yr
- baseline payback (pre-incentive)
- 5
- Colorado programs that stack
- full
- net-metering policy
Payback and savings are modeled from public NREL/EIA data; the program benefit is summarized from DSIRE and may change.
Program description
Solar energy equipment is exempt from Colorado sales and use tax.
Program at a glance
- Program type
- Tax exemption
- Eligible customers
- Residential
- Stated benefit
- Sales tax exemption
- State electricity rate
- 14.2¢/kWh
- Colorado solar score
- 45/100
How Colorado compares to the U.S. average
Why this incentive matters more (or less) here - Colorado's solar fundamentals against the national average.
Source: NREL irradiance and U.S. EIA rates; payback modeled by PlainSolarData. Bars are scaled to the larger of the two values per metric.
Solar's trajectory in Colorado
The market this incentive operates in: total installed solar capacity in Colorado reported to the EIA.
Colorado's solar incentive stack
How this tax exemption sits among Colorado's 4 tracked programs, by type
- Tax exemption
Tax exemption
2 programs
- Net metering
Net metering
1 programs
- Performance
Performance
1 programs
What this shows Colorado tracks 3 incentive types; 2 are tax exemptions like this one, removing a cost solar owners would otherwise carry, on top of the state's other program types.
How this incentive fits Colorado's solar picture
The CO Renewable Energy Sales Tax Exemption removes a tax burden solar owners would otherwise carry, one of Colorado's DSIRE-tracked solar incentive programs. Eligibility is scoped to residential customers, with a stated benefit of Sales tax exemption. DSIRE lists no scheduled sunset, though enabling legislation and appropriations can still be revised year to year.
That baseline is slower than most states, which raises the stakes for every incentive on the table. Colorado averages 5.5 kWh/m²/day of usable sunlight and residential rates of 14.2¢/kWh, producing an estimated 9,636 kWh/year and $1,368 of annual utility offset on a typical 6 kW system costing $16,800. That baseline already implies a 12.3-year simple payback and a 25-year modeled net of roughly $17,400 before this incentive - every dollar this tax exemption delivers compresses that payback further.
A handful of other levers are worth checking alongside this one. Colorado has 5 solar incentive programs indexed in DSIRE, including adjacent options like CO Residential Renewable Energy Property Tax Exemption, CO Net Metering, Xcel Energy Solar*Rewards. The state's net-metering policy is classified as full, which governs how excess generation is credited and often decides whether a given program is worth claiming for a specific household.
Your next step
- See Colorado's full solar profile, score, irradiance, rates, payback, and every program you can claim. Colorado solar data
- Run the savings calculator with your real bill to see how this incentive changes your own payback. ROI calculator
- Read how state and federal solar credits work together. Tax-credit guide
Estimates here are modeled from public data and are not financial advice; confirm program terms and your own eligibility before relying on a dollar figure.
Other Colorado incentives
Frequently asked questions
What is the CO Renewable Energy Sales Tax Exemption?
How does the CO Renewable Energy Sales Tax Exemption work?
Who is eligible for the CO Renewable Energy Sales Tax Exemption?
How does this incentive affect solar ROI in Colorado?
Are there other solar incentives in Colorado?
Incentive data from the DSIRE (Database of State Incentives for Renewables & Efficiency); state solar economics from NREL and the U.S. EIA. See our methodology.