Author: Municipal Finance Legal Guidance
This month's Ask DLS features frequently asked questions concerning electric generating facility (solar) exemptions. Please let us know if you have other areas of interest or send a question to cityandtown@dor.state.ma.us. We would like to hear from you.
What is a property tax exemption?
A real property tax exemption is a release or discharge from the obligation to pay all or a portion of a local real property tax. Exemptions are established by the legislature for particular categories of property or persons and are generally found in G.L. c. 59, § 5. However, a few are contained in other general laws and some are provided by court decisions. Exemption is a privilege and all claimants must demonstrate that they clearly qualify.
Does a property tax exemption exist for solar panels?
Yes. In general, Clause 45 provides a property tax exemption for three categories of solar and wind powered systems, described below.
A solar powered system, wind powered system or a solar or wind powered system that is co-located with an energy storage system, as defined in section 1 of chapter 164, that is:
- capable of producing not more than 125 per cent of the annual electricity needs of the real property upon which it is located; provided, however, that the real property shall include both contiguous or non-contiguous real property within the same municipality in which there is a common ownership interest;
- a solar or wind powered system or a solar or wind powered system that is co-located with energy storage that is equal to or less than 25 kilowatts or less in capacity, provided that the capacity of the system is verified by department of energy resources incentive program documentation or electric distribution company permission to operate documentation; or
- a solar or wind powered system or energy storage system, or a combination therein, that has entered into an agreement for payment in lieu of taxes (PILOT) associated with the system with the municipality where the system is located. The amended clause 45 does not apply to: (i) solar powered systems developed under G.L. c. 164, § 1A or (ii) solar, wind, or energy storage systems otherwise owned by distribution or electric companies as defined under G.L. c. 164, § 1.
The exemption period is 20 years; however, the owner of the solar or wind powered system and the municipality where the system is located may agree (in writing) for the exemption to continue longer than 20 years.
As with all property tax exemptions, the burden is on the property owner seeking the exemption to demonstrate eligibility for the exemption as of the eligibility date. If the property does not qualify for the exemption, the property will be taxable unless another exemption applies.
What is the best way for a municipality to verify that a solar powered system cannot produce more than 125 per cent of the annual electricity needs of the real property upon which it is located?
To answer this question, the taxpayer will need to provide to the assessors:
- The composition of the solar powered system;
- The maximum electric generation capacity of that system; and
- The annual electricity needs of the real property where it is located*.
*This includes both contiguous and non-contiguous properties in the municipality under common ownership.
The burden is on the property owner to demonstrate eligibility. If they fail to do so, the electric generating system is taxable. Further, we do not think an annual application is necessary after initially establishing the requisite qualifications. However, should there be a change in any of the factors listed above, the taxpayer should resubmit an application to demonstrate they are still eligible.
Can a municipality grant a preemptive or blanket municipal-wide declaration that certain energy systems meet these criteria?
We do not think so. Abatement consideration is made on an individual parcel basis. However, the municipality may use general estimates to verify that the above criteria are being satisfied. For example, if the average Massachusetts homeowner needs a little more than a 10 kW solar panel system to cover their electricity needs, and a 10kW solar system typically requires 25 to 34 solar panels, then if an applicant’s home is of the average size and only has 5 panels, then the assessors can reasonably assume the system meets the above criteria. DLS does not have expertise in the area of electric generation systems and, as such, defers to professionals with such specialized knowledge to advise local assessors on any ratios and/or averages of system capacities and sizes that would guide them in making these determinations.
Helpful Resources
City & Town is brought to you by:
Editor: Dan Bertrand
Editorial Board: Tracy Callahan, Sean Cronin, Janie Dretler, Christopher Ketchen, Paula King, Jen McAllister, Jessica Sizer and Tony Rassias
| Date published: | January 8, 2026 |
|---|