HB4725 - Relating to a sales tax exemption for the sale, lease, or installation of distributed energy systems for residential and business use.

      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.