The 2001 Texas Legislature created a new sales tax exemption to encourage Texans to conserve water. The exemption, which took effect September 1, 2001, applies to equipment, supplies and services used solely for certain types of water conservation. For the purpose of this exemption, “solely” means the equipment, services or supplies are used exclusively for the reason stated. For example, a water dam in a toilet tank is used only to save water, therefore qualifies for the exemption. A washing machine with special features to conserve water does not qualify, because it’s used to wash clothes, not solely to reduce water use.
The new exemption covers the following types of conservation; each type also gives examples of equipment, supplies and services now exempt from sales tax if used solely for the purpose shown.
- Rainwater harvesting: rain barrels; gutters used solely to route the water into rain barrels or rainwater collection systems; tanks and cisterns; roof washers used in a harvesting systems; screens and filters for the gutters, barrels, tanks, cisterns and roof washers; and a collection surface area that is not used as a roof of a structure or storage area.
- Water recycling and reuse: chemicals, tanks and cisterns, and water recycling systems for washing machines.
- Reduction or elimination of water use: water dams for toilets, timers attached to sprinkler systems, water displacement devices for toilet tanks, and faucet sensors that shut off water flow.
- Desalination of surface water or groundwater: cleaning and pickling valves, filters, membranes, pre-filter pumps, product flow meters, salinity meters, and high-pressure control valves.
- Brush control designed to increase the availability of water: spray equipment and calibration of the equipment, herbicides, tractors, bulldozers and chain saws.
- Precipitation enhancement: end-burning cloud-base flares; acetone solution wing-tip generators; pressure transducers; spectrometer probes; and calibration equipment.
- Water or wastewater system: equipment, services, and supplies to construct or operate a system certified by the Texas Natural Resources Conservation Commission as a regional system.The exemption also covers a water supply or wastewater system built or operated by a private entity if the system is certified by a political subdivision or by a non-profit water supply corporation created and operated under Chapter 67 of the Texas Water Code.
Not exempt are items that do not meet the “sole purpose” test, such as water-efficient appliances, pumps for fountains or water displays, tools used for landscaping or lawn care, lawnmowers, shredders, low-flush toilets, and water hoses.
The purchaser of equipment used for the sole purpose of water conservation or reuse must present the seller a Texas sales tax exemption certificate stating valid qualifications for the exemption. The certificate must also show the purchaser’s name and address; description of the item, the reason the purchase is tax exempt, the purchaser’s signature, the date, and the seller’s name and address.
Download your Texas Sales and Use Tax Resale Certificate HERE.