Rebates and incentives, Tennessee
One of the thinner incentive states: no state credit, standard sales tax for most homeowners despite some marketing claims, a property tax cap worth having, and below-retail TVA export payments. See your numbers, honestly.
How it works
Step 1
The exemption applies to certified green energy production facilities, a formal designation aimed at larger projects, not typical residential rooftops. Ask your installer directly whether your specific project qualifies for certification before assuming this savings applies.
Step 2
Since Tennessee has no statewide mandate, this varies by provider. If your utility does participate through TVA's Dispersed Power Production program, expect a rate well below retail, and size your system around your own usage rather than for surplus export. Check your federal ITC status too, since it changed for 2026 and affects your overall math.
Step 3
Use the property tax exemption savings calculator to estimate how much the 12.5% assessment cap is worth over time compared to a full-value assessment.
Tennessee Code Annotated Section 67-6-346 does provide a sales and use tax credit, refund, or authorized tax-exempt purchase for machinery and equipment used in a Certified Green Energy Production Facility. Reading the statute directly, though, this exemption is tied to formal certification through the Department of Environment and Conservation, requiring an application from both the installing contractor and the taxpayer before the tax-exempt purchase authority is granted. This certification process is structured around larger commercial and utility-scale green energy projects, and it is not the kind of automatic, point-of-sale exemption a homeowner buying a standard rooftop system would typically pursue or qualify for. Several sources describe this exemption as if it applies broadly to residential solar, which overstates what a typical homeowner actually receives; other sources correctly note that Tennessee charges standard sales tax on residential solar systems. Given the weight of the statutory language itself, budget for standard state and local sales tax on your system unless your installer can confirm your specific project has pursued and received the formal certification. Before you count on any incentive, check the DSIRE database of state incentives for your state's current programs.
Under a 2013 amendment to Tennessee Code Annotated Section 67-5-601, the taxable assessed value of solar generating property is capped at 12.5% of the total installed cost, rather than being assessed at full market value the way a typical home improvement would be. In practice, this shields roughly 87.5% of what your system would otherwise add to your taxable property value from your tax bill, which is a meaningful ongoing benefit even though it falls short of a complete exemption. Some sources describe wishing this were a full 100% exemption like several other states offer, which is a fair characterization of the gap, but the 12.5% assessment cap still represents real, automatic, ongoing savings without requiring a separate application. The property tax exemption savings calculator can help you size up what the 12.5% cap is actually saving you each year.
Tennessee has no statewide net metering mandate, and the Tennessee Public Utilities Commission permits but does not require utilities to offer it. Most of the state is served by local power companies distributing Tennessee Valley Authority power, and where TVA's Dispersed Power Production program is available, it pays a commonly cited avoided-cost rate of roughly 4 to 5 cents per kWh for exported solar generation, a fraction of a typical Tennessee retail rate closer to 12 to 14 cents per kWh. This gap is large enough that a system sized for significant surplus export will likely underperform a system sized closer to your own household consumption, since self-consumed electricity offsets your bill at the full retail rate while exported electricity earns only the much lower program rate, where a program exists at all. Confirm directly with your local power company whether any export program is offered before assuming a specific rate applies.
Tennessee has no broad state personal income tax, which means there is no tax liability for a state solar credit to offset against, unlike states that pair a credit with their income tax system. With the federal Residential Clean Energy Credit also gone for purchased systems placed in service after December 31, 2025, Tennessee's remaining incentive picture rests on the property tax assessment cap and whatever export payment your specific utility provides. Compare the overall landscape against a neighboring state with the Kentucky incentive estimator or the Georgia incentive estimator.
If you borrow for the rest of the system, the combined loan and rebate timing tool takes your rebate total and works out the monthly payment on the balance.
Questions
For most homeowners, no, despite what a few sources claim. The sales and use tax exemption under Tennessee Code Annotated Section 67-6-346 applies to machinery and equipment used in a Certified Green Energy Production Facility, a formal designation issued by the Department of Environment and Conservation that requires a certification application from both the contractor and the taxpayer before installation. This process is built around larger commercial or utility-scale projects, not a simple homeowner rooftop purchase, and the statute's own text describes a credit, refund, or authorized tax-exempt purchase tied to that certification, not an automatic point-of-sale exemption. Most residential buyers pay Tennessee's standard state and local sales tax on their system.
Under a 2013 amendment to Tennessee Code Annotated Section 67-5-601, the taxable assessed value of solar generating property is capped at 12.5% of the total installed cost, rather than being assessed at full market value like most home improvements. In practice, this shields roughly 87.5% of what your system would otherwise add to your taxable property value, which meaningfully limits how much installing solar raises your property tax bill over time, even though it is not a complete exemption.
Considerably less than the retail rate you pay for electricity, and only if your local power company participates. Tennessee has no statewide net metering mandate, and most utilities in the state are served by the Tennessee Valley Authority, whose Dispersed Power Production program pays a commonly cited avoided-cost rate of roughly 4 to 5 cents per kWh for exported solar, against a typical Tennessee retail rate closer to 12 to 14 cents per kWh. Given this gap, sizing your system to closely match your own household consumption, rather than for large surplus export, generally produces a better return than building for maximum production.
No, and there is no mechanism for one to exist. Tennessee has no broad state personal income tax, so there is nothing for a state solar income tax credit to apply against. The federal Residential Clean Energy Credit also ended for purchased systems placed in service after December 31, 2025, which leaves the property tax assessment cap and whatever export payment your utility offers as the two state-level factors actually worth building into your Tennessee solar math.
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