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Rhode Island offers TWO solar tax exemptions: a 7% sales tax exemption on solar equipment, installation labor, AND battery storage (via H7506), saving ~$1,714 on a typical $24,480 system. Plus a 20-year property tax exemption that prevents solar from increasing your assessment, saving ~$362/year or $7,240 over 20 years. Combined tax savings: ~$8,954 on a typical 8 kW system.
The federal residential solar tax credit (Section 25D) expired December 31, 2025 under OBBBA. There is zero federal tax credit for homeowner solar purchases in 2026. Rhode Island's state tax exemptions — sales tax and property tax — are now even more critical to making solar affordable. Third-party owned systems (PPA/lease) may still access Section 48 ITC through the financing company.
Rhode Island exempts solar energy systems from the 7% state sales and use tax. This includes equipment, installation labor, and — thanks to H7506 — battery storage systems. The exemption is automatic at the point of sale.
Calculation: $24,480 x 7% = $1,713.60 saved at the point of purchase
Adding a battery? A 13.5 kWh battery (~$12,000-$15,000) saves an additional $840-$1,050 in sales tax under H7506.
Rhode Island bill H7506 specifically extended the solar sales tax exemption to include battery energy storage systems. This means both standalone batteries installed alongside solar and batteries added after initial solar installation qualify for the 7% sales tax exemption. With battery costs running $10,000 to $18,000, this saves homeowners $700 to $1,260 in sales tax on battery storage alone.
10 kWh Battery
~$10,000
Save $700
13.5 kWh Battery
~$13,500
Save $945
18 kWh Battery
~$18,000
Save $1,260
Under Rhode Island General Laws 44-3-21, renewable energy systems are exempt from local property tax assessment for 20 years. Solar panels increase your home's market value without increasing your property tax bill.
RI Avg Property Tax Rate
1.53%
Statewide average effective rate
Annual Property Tax Savings
~$362/yr
Based on 8 kW system, 1.53% rate
20-Year Property Tax Savings
~$7,240
Full exemption period total
Unlike Connecticut and Massachusetts (which also offer 20-year exemptions) or New Jersey (perpetual), Rhode Island's exemption expires after 20 years. After year 20, your municipality can include the remaining value of the solar system in your property assessment. However, by year 20, solar panels have minimal assessed value due to depreciation — typically 10 to 20% of original cost. The actual property tax impact after expiration is usually very small: approximately $36 to $72 per year on an 8 kW system.
Both exemptions stack. Here is how the combined sales tax and 20-year property tax savings scale with system size for Rhode Island homeowners.
| System Size | System Cost | Sales Tax Saved | Annual Prop Tax Saved | 20-Yr Prop Tax Saved | Combined 20-Yr |
|---|---|---|---|---|---|
| 6 kW | $17,760 | $1,243 | $271/yr | $5,418 | $6,661 |
| 8 kW | $23,680 | $1,658 | $361/yr | $7,221 | $8,879 |
| 10 kW | $29,600 | $2,072 | $451/yr | $9,024 | $11,096 |
| 12 kW | $35,520 | $2,486 | $542/yr | $10,830 | $13,316 |
| 15 kW | $44,400 | $3,108 | $676/yr | $13,527 | $16,635 |
Based on ~$3.06/W system cost, RI average property tax rate of 1.53%, and added home value equal to system cost. Actual property tax savings vary by municipality. Highlighted row shows typical 8 kW system.
Typical 8 kW System in Rhode Island
System Cost: $24,480
Sales Tax Exemption
$1,714
One-time — day one
Property Tax (20yr)
$7,240
~$362/yr x 20 years
REF Rebate
$5,000
$0.65/W capped at $5,000
Net Metering (25yr)
$24,000+
80% of $0.29/kWh retail, protected through 2039
Estimated Total Tax Exemption Value (20 Years)
$8,954
Sales tax ($1,714) + property tax ($7,240) — on a $24,480 system, before REF rebate, REG, and net metering
Tax exemption savings only. Total solar value including REF, REG, and net metering exceeds $35,000 over 25 years. Actual results vary by location, system size, and municipality.
Rhode Island is one of only two New England states offering BOTH a sales tax exemption AND a property tax exemption for solar. Here is how RI compares across the region.
| State | Sales Tax | Property Tax | Avg Prop Tax Rate |
|---|---|---|---|
| Rhode Island | 7% exempt (incl. batteries) | 20-year exemption | 1.53% |
| Massachusetts | 6.25% exempt | 20-year exemption | 1.12% |
| Connecticut | 6.35% (NOT exempt) | 100% exempt | 2.14% |
| New Hampshire | No state sales tax | No statewide exemption | 1.86% |
| Vermont | 6% exempt | No statewide exemption | 1.83% |
| Maine | 5.5% (NOT exempt) | No statewide exemption | 1.09% |
Rhode Island and Massachusetts are the only two New England states offering both sales tax and property tax exemptions for solar. Rhode Island's higher sales tax rate (7% vs 6.25%) means greater sales tax savings.
Both exemptions are designed to be automatic in Rhode Island. The sales tax exemption applies at purchase, and the property tax exemption is applied by your local assessor. Here is what to verify.
The 7% RI sales tax exemption is applied automatically by your solar installer at the point of sale. You do not need to file any paperwork, submit forms, or apply separately. Your installer deducts the 7% from your invoice before you pay. This covers all solar equipment, installation labor, and battery storage systems (per H7506).
Tip: Verify your final invoice shows $0 in sales tax. If sales tax was charged, contact your installer immediately for correction.
Under Rhode Island General Laws 44-3-21, renewable energy systems are exempt from local property tax assessment for 20 years from the date of installation. Your local tax assessor should automatically exclude the solar system value from your property assessment. Unlike some states, RI does not require homeowners to file a separate application.
Tip: Confirm with your town tax assessor after installation that the solar system is coded as exempt in their records.
When your next property tax bill arrives after solar installation, check that your assessed value has not increased due to the solar panels. If you see an increase that corresponds to the solar system value, contact your municipal tax assessor and reference R.I.G.L. 44-3-21.
Tip: Compare your assessed value from the year before and after installation. They should be the same (barring normal market adjustments).
Maintain your installation invoice, building permit, electrical inspection certificate, and interconnection agreement for the full 20-year exemption period. If your property is reassessed, the assessor may need to verify the installation date to confirm the exemption still applies.
Tip: Store digital copies in cloud storage. The 20-year clock starts from your installation completion date, not your purchase date.
Rhode Island has 39 municipalities, each with its own tax assessor and property tax rate. While the state law (R.I.G.L. 44-3-21) provides the exemption statewide, the effective property tax rate varies from approximately 0.84% in Little Compton to over 2.5% in some urban areas like Central Falls. Higher-rate municipalities yield larger annual property tax savings. Contact your specific town's tax assessor to confirm the exemption is applied correctly.
Different situations affect your exemption value. Here are the most common scenarios Rhode Island homeowners encounter.
You buy the system outright. Both exemptions apply in full. The sales tax exemption saves 7% at purchase. The property tax exemption protects you for 20 years.
Tax savings (8 kW): $1,714 sales tax + $7,240 property tax = $8,954 total
You finance the system with a loan. Both exemptions still apply because you own the system. The sales tax exemption reduces your total loan amount. The property tax exemption applies for 20 years.
Tax savings: Same as cash. The lender funds the exempt amount, so your loan is $1,714 less.
A third party owns the system on your roof. The property tax exemption still applies (the system does not increase your assessment). Sales tax savings go to the system owner, which may be reflected in your lower PPA/lease rate.
Note: Third-party owners can claim Section 48 ITC (still available), which is why PPA/lease rates remain competitive even without 25D.
The property tax exemption transfers with the home. The new buyer gets the remaining years of the 20-year exemption. You benefit from a higher sale price (solar adds ~$15,000 to $25,000 in resale value) while the buyer gets continued property tax protection.
Example: If you sell 8 years after installing, the buyer gets 12 years of remaining property tax exemption.
Answers to the most common questions about Rhode Island solar tax exemptions.
Rhode Island offers two solar tax exemptions: (1) a 7% state sales tax exemption on solar energy equipment, installation labor, and battery storage systems (extended by H7506), saving approximately $1,714 on a typical $24,480 system; and (2) a 20-year property tax exemption under R.I.G.L. 44-3-21 that prevents your solar system from increasing your property tax assessment, saving approximately $362 per year or $7,240 over the full 20-year period. Combined, these exemptions save Rhode Island homeowners approximately $8,954.
Yes. Rhode Island bill H7506 specifically extended the sales tax exemption to include battery storage systems. This means the 7% state sales tax is waived on both your solar panels and any battery system you install, whether at the same time as your panels or added later. For a typical 13.5 kWh home battery costing approximately $12,000 to $15,000, the sales tax exemption saves an additional $840 to $1,050.
The Rhode Island solar property tax exemption lasts 20 years from the date of installation. During this period, the value of your solar energy system is excluded from your local property tax assessment. After the 20-year period expires, the municipality can include the remaining value of the solar system in your property assessment, though by that point the system will have minimal assessed value due to depreciation.
No separate application is required in most Rhode Island municipalities. Under R.I.G.L. 44-3-21, the exemption is automatic. However, it is still a good practice to contact your local tax assessor after installation to confirm that the solar system has been properly coded as exempt in their records. Provide a copy of your installation invoice and permit if requested.
No. The federal residential solar tax credit (Section 25D) expired on December 31, 2025, under the One Big Beautiful Bill Act signed July 4, 2025. There is zero federal tax credit for homeowner cash or loan solar purchases in 2026. However, Rhode Island state incentives remain strong: the 7% sales tax exemption, 20-year property tax exemption, REG program (15-year above-market rate payments), REF rebate ($0.65/W capped at $5,000 + $2,000 battery adder), and net metering guaranteed through 2039 still make solar financially compelling. Third-party owned systems (PPA/lease) can still access Section 48 ITC through the financing company.
See how much you can save with the 7% sales tax exemption, 20-year property tax exemption, REF rebate, REG program, and net metering combined. Custom system design in minutes.
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Full overview of solar in Rhode Island: costs, REG, REF, net metering, and financing options.
Detailed pricing data for Rhode Island. Average $3.06/W, system costs, and payback timelines.
$0.65/W capped at $5,000 (+$2,000 battery adder) from Commerce RI. How to apply and current funding status.
15-year above-market rate payments. How the Renewable Energy Growth program works.
25D is dead. How RI incentives still make solar work without the federal credit.
Complete hub for all RI solar, heat pump, and energy efficiency guides.