Relating to a sales tax exemption for the sale, lease, or installation of distributed energy systems for residential and business use.

89(R) HB 4725 - Introduced version - Bill Text

By: Money

H.B. No. 4725

A BILL TO BE ENTITLED

AN ACT

relating to a sales tax exemption for the sale, lease, or

installation of distributed energy systems for residential and

business use.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Short Title.

This Act may be cited as the "Texas Distributed Energy Sales

Tax Exemption Act."

SECTION 2. LEGISLATIVE FINDINGS AND PURPOSE.

(a) The legislature finds that:

(1) advancements in energy generation technology

enable homeowners, businesses, and industrial facilities to

produce electricity on-site using distributed energy systems;

(2) exempting distributed energy systems from sales

and use taxes is necessary to maintain a competitive and equitable

energy market, support energy security, and promote economic growth

in this state; and

(3) the imposition of sales and use taxes on

distributed energy systems creates a financial barrier to adoption

and limits access to energy self-sufficiency.

(b) The purpose of this Act is to exempt from sales and use

taxes the sale, lease, or installation of distributed energy

systems in this state.

SECTION 3. SALES TAX EXEMPTION FOR DISTRIBUTED ENERGY

SYSTEMS.

Chapter 151, Tax Code, is amended by adding Section 151.3187

to read as follows:

Sec. 151.3187. DISTRIBUTED ENERGY SYSTEMS.

(a) In this section, "distributed energy system" means a

device or system that:

(1) generates electricity solely for on-site use:

(A) solar energy;

(B) wind energy;

(C) natural gas;

(D) hydrogen;

(E) methane;

(F) propane;

(G) battery storage; or

(H) liquid fuels;

(2) includes equipment necessary to support the

operation of the system, including:

(A) photovoltaic panels;

(B) inverters;

(C) battery storage systems;

(D) mounting hardware rated for solar or battery

installation;

(E) natural gas or hydrogen generators; or

(F) methane digesters; and

(3) is primarily designed and used to supply

electricity to a structure or facility located in this state.

(b) The sale, use, lease, or installation of a distributed

energy system is exempt from the taxes imposed by this chapter.

(c) The exemption under Subsection (b) applies only to the

portion of a transaction directly attributable to the purchase,

lease, or installation of a distributed energy system and does not

apply to costs related to:

(1) construction not directly required for the

installation of the system;

(2) repairs; or

(3) maintenance services.

(d) A person claiming an exemption under this section shall,

on request of the comptroller, provide documentation sufficient to

establish eligibility for the exemption, including records

verifying that the system meets the requirements of Subsection (a).

SECTION 4. COMPTROLLER RULEMAKING.

(a) The comptroller shall adopt rules as necessary to

implement and administer Section 151.3187, Tax Code, as added by

this Act, including rules to:

(1) establish criteria for determining the

eligibility of a device or system as a distributed energy system;

(2) prescribe reporting requirements for sellers,

lessors, and installers claiming the exemption; and

(3) provide for enforcement measures to ensure

compliance with this Act.

(b) The comptroller shall adopt the rules required by

Subsection (a) not later than June 1, 2025.

SECTION 5. EFFECTIVE DATE; APPLICATION.

(a) This Act takes effect July 1, 2025.

(b) The exemption provided by Section 151.3187, Tax Code, as

added by this Act, applies only to a sale, lease, or installation of

a distributed energy system that occurs on or after July 1, 2025.

SECTION 6. SEVERABILITY.

If a provision of this Act or its application to a person or

circumstance is held invalid, the invalidity does not affect

another provision or application of this Act that can be given

effect without the invalid provision or application, and to this

end the provisions of this Act are severable.