Labor Standards Certification for Tax Incentives

Sales and use tax refunds and deferrals are available for certain clean energy projects, when certified by the Department of Labor & Industries (L&I). The state created this program as a way to address the impacts of climate change on a large scale.

NOTE: If you are a homeowner adding solar panels to your residence, you do not need to read further. Please go to the state Department of Revenue (DOR) website for additional information.

To receive a refund, a project developer must comply with specific labor standards. The machinery and equipment generating the electricity must be installed and the project completed by Dec. 31, 2029.

The amount of the refund depends on the generating capacity of the project.
Projects that can receive the refund must be of the following types:

  • Solar.
  • Fuel cells.
  • Wind.
  • Biomass energy.
  • Geothermal resource.
  • Tidal or wave energy.
  • Technology that converts otherwise lost energy from exhaust.

The labor standards L&I reviews to certify a project can be included in a Project Labor Agreement (PLA) or Community Workforce Agreement (CWA) as part of the project. A project without a PLA or CWA must still fulfill the specific labor standards.

You must submit an application prior to the start of the project to L&I to receive a certification for your project. Take the certification to DOR to receive a refund for the purchase of the energy generating machinery and equipment.

Refunds - Large Energy Generation Project

IF you are constructing a facility generating more than 1,000 watts AC (1 KW) (Example: Enough energy to power at least 10-15 incandescent light bulbs or a household dishwasher) of electricity from any of these power sources,

OR

Constructing a solar energy system capable of generating more than 500 kilowatts AC (example: Enough energy to power more than a dozen homes) of electricity,

THEN

You can receive up to a 100% refund of the sales tax spent on the energy-producing equipment.

100% Tax Refund

To receive a 100% tax refund, you must submit an Application for Clean Energy Labor Standards Certification prior to the start of the project with the following:

  • A signed Project Labor Agreement (PLA) or Community Workforce Agreement (CWA) prior to the start of the project.

A PLA or CWA is defined as a collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment on the project.

75% Tax Refund

To receive a 75% tax refund, you must submit an Application for Clean Energy Labor Standards Certification prior to the start of the project.

In addition, you must contact Office of Minority & Women’s Business Enterprises (OMWBE) and Department of Veteran Affairs (DVA) for consultation on the development of your plan to meet the standards or good faith efforts. The plan will identify steps which could reasonably be expected to meet the women, minority, and veteran-owned businesses procurement and contract standards or qualify for good faith efforts.

At the end of the project, you must provide documentation to L&I (see below) indicating that you met all of the following criteria:
  • 5.5% of contract dollars awarded were to, minority-owned businesses.
  • 9.5% of contract dollars awarded to women-owned businesses.
  • 5% of the contract dollars awarded to veteran-owned businesses.
  • 15% of the project's total labor hours were performed by registered apprentices approved by the Washington State Apprenticeship and Training Council (WSATC).
  • 35% (20% for rural counties*) of the project’s total labor hours were performed by local residents.
  • Contracts awarded were to businesses that have no findings of violation of federal or state wage and hour laws and regulations.
  • All workers performing labor hours on the project were paid equal to or more than prevailing wages as determined by the department under Chapter 39.12 RCW.
  • Good-faith efforts are met for any of the criteria above, as defined in Chapter 296-140-002 WAC.

* Counties with a population density of less than 100 people per square mile or a county smaller than 225 square miles as determined by the state Office of Financial Management.

50% Tax Refund

To receive 50% tax refund, you must submit an Application for Clean Energy Labor Standards Certification prior to the start of the project.

At the end of the project, you must provide documentation to L&I (see below) indicating that you met all of the following criteria:

  • 5.5% of contract dollars awarded were to minority-owned businesses.
  • 9.5% of contract dollars awarded to women-owned businesses.
  • 5% of the contract dollars awarded to veteran-owned businesses.
  • 15% of the project's total labor hours were performed by registered apprentices approved by the Washington State Apprenticeship and Training Council (WSATC).
  • 35% (20% for rural counties*) of the project’s total labor hours were performed by local residents.
  • Contracts awarded were to businesses that have no findings of violation of federal or state wage and hour laws and regulations.
  • Good faith efforts are met for any of the criteria above, as defined in Chapter 296-140-002 WAC.

*See the How to Apply tab for more information.*

* Counties with a population density of less than 100 people per square mile or a county smaller than 225 square miles as determined by the state Office of Financial Management.

Refunds - Small Energy Generation Project

IF you are constructing solar energy systems capable of generating more than 100 kilowatts AC, but no more than 500 kilowatts AC (example: Powering up to about a dozen homes) of electricity,

THEN you can receive 50% refund of the sales tax spent on the energy-producing equipment.

You must submit an Application for Clean Energy Labor Standards Certification prior to the start of the project.

In addition, you must contact Office of Minority & Women’s Business Enterprises (OMWBE) and Department of Veteran Affairs (DVA) for consultation on the development of your plan to meet the standards or good faith efforts. The plan will identify steps which could reasonably be expected to meet the women, minority, and veteran-owned businesses procurement and contract standards or qualify for good faith efforts.

At the end of the project, you must provide documentation to L&I (see below) indicating that you met all of the following criteria:

  • 5.5% of contract dollars awarded were to minority-owned businesses.
  • 9.5% of contract dollars awarded to women-owned businesses.
  • 5% of the contract dollars awarded to veteran-owned businesses.
  • 15% of the project's total labor hours were performed by registered apprentices approved by the Washington State Apprenticeship and Training Council (WSATC).
  • 35% (20% for rural counties*) of the project’s total labor hours were performed by local residents.
  • Contracts awarded were to businesses that have no findings of violation of federal or state wage and hour laws and regulations.
  • Good faith efforts are met for any of the criteria above, as defined in Chapter 296-140-002 WAC.

*See the How to Apply tab for more information.*

*Counties with a population density of less than 100 people per square mile or a county smaller than 225 square miles as determined by the state Office of Financial Management.

Tax Deferrals - Solar, Clean Tech

To receive a deferral, a project developer must comply with specific labor standards described below. Applications must be received by June 30, 2032. Projects must be completed by Jan. 1, 2033.

Qualified projects must meet the standards in one of these categories:

  • Clean technology manufacturing, clean alternative fuels production, and renewable clean energy storage (projects must be at least $2 million).
  • Solar canopies on large-scale commercial parking lots and other similar areas (must produce at least 1 MW of energy).

The labor standards L&I reviews to certify a project can be included in a Project Labor Agreement (PLA) or Community Workforce Agreement (CWA). A project without a PLA or CWA must still fulfill the labor standards, described below.

In the application to L&I, you will need to decide one of three tax deferral amounts sought:

100% Tax Deferral

To qualify for 100% tax deferral, you must first contact the Department of Revenue (DOR) to file for a deferral certificate and will be provided with an application Id.

Once DOR provides the application Id, you must then submit an Application for Clean Energy Labor Standards Certification prior to the start of the project with the following:

  • A signed Project Labor Agreement (PLA) or Community Workforce Agreement (CWA) prior to the start of the project.

A PLA or CWA is defined as a collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment on the project.

75% Tax Deferral

To receive a 75% tax deferral, you must first contact the Department of Revenue (DOR) to file for a deferral certificate and will be provided with an application Id.

Once DOR provides the application Id, you must then submit an Application for Clean Energy Labor Standards Certification prior to the start of the project.

In addition, you must contact Office of Minority & Women’s Business Enterprises (OMWBE) and Department of Veteran Affairs (DVA) for consultation on the development of your plan to meet the standards or good faith efforts. The plan will identify steps which could reasonably be expected to meet the women, minority, and veteran-owned businesses procurement and contract standards or qualify for good faith efforts.

At the end of the project, you must provide documentation to L&I (see below) indicating that you met all of the following criteria:

  • 5.5% of contract dollars awarded were to, minority-owned businesses.
  • 9.5% of contract dollars awarded to women-owned businesses.
  • 5% of the contract dollars awarded to veteran-owned businesses.
  • 15% of the project's total labor hours were performed by registered apprentices approved by the Washington State Apprenticeship and Training Council (WSATC).
  • 35% (20% for rural counties*) of the project’s total labor hours were performed by local residents.
  • Contracts awarded were to businesses that have no findings of violation of federal or state wage and hour laws and regulations.
  • All workers performing labor hours on the project were paid equal to or more than prevailing wages as determined by the department under Chapter 39.12 RCW.
  • Good-faith efforts are met for any of the criteria above, as defined in Chapter 296-140-002 WAC.

* Counties with a population density of less than 100 people per square mile or a county smaller than 225 square miles as determined by the state Office of Financial Management.

50% Tax Deferral

To receive 50% tax deferral, you must first contact the Department of Revenue (DOR) to file for a deferral certificate and will be provided with an application Id.

Once DOR provides the application Id, you must then submit an Application for Clean Energy Labor Standards Certification prior to the start of the project.

At the end of the project, you must provide documentation to L&I (see below) indicating that you met all of the following criteria:

  • 5.5% of contract dollars awarded were to minority-owned businesses.
  • 9.5% of contract dollars awarded to women-owned businesses.
  • 5% of the contract dollars awarded to veteran-owned businesses.
  • 15% of the project's total labor hours were performed by registered apprentices approved by the Washington State Apprenticeship and Training Council (WSATC).
    35% (20% for rural counties*) of the project’s total labor hours were performed by local residents.
  • Contracts awarded were to businesses that have no findings of violation of federal or state wage and hour laws and regulations.
  • Good faith efforts are met for any of the criteria above, as defined in Chapter 296-140-002 WAC.

* Counties with a population density of less than 100 people per square mile or a county smaller than 225 square miles as determined by the state Office of Financial Management.

How to Apply

This section details how to apply for sales and use tax refunds and deferrals.

Refunds – for large or small generation projects

Prior to the start of your project:

Please contact Labor & Industries (L&I) at CleanEnergyReview@Lni.wa.gov to request an application and provide the following information:

  • Submitter’s full name.
  • Business name.
  • Business UBI.

L&I will contact you within 7-10 business days regarding next steps to submit an Application for Clean Energy Labor Standards Certification.

Deferral – for qualifying projects

Prior to the start of your project:

You must first contact the Department of Revenue (DOR) at DORDeferrals@dor.wa.gov to file for a deferral certificate and will be provided with an application Id.

Once DOR provides the application Id, please contact Labor & Industries (L&I) at CleanEnergyReview@Lni.wa.gov to request an application and provide the following information:

  • Submitter’s full name.
  • Business name.
  • Business UBI.

L&I will contact you within 7-10 business days regarding next steps to submit an Application for Clean Energy Labor Standards Certification.

  • If your application is approved and L&I certifies labor standards, you will receive a letter of certification. This letter must be provided to DOR to receive a tax incentive.
  • If your application is denied, it is because you did not meet at least one of the requirements, or acted in good faith as defined in Chapter 296-140-002 WAC.

We will send you a letter with the detailed findings and unmet criteria.

  • If you disagree with the decision, you may file a written request for reconsideration within 30 calendar days from the date L&I’s decision is communicated to the applicant. For more information on filing a reconsideration, see WAC 296-140-009.

Questions? Call 360-902-5335 and press option 4, or email CleanEnergyReview@Lni.wa.gov.

Rulemaking

This page reflects all current Clean Energy rules.

See complete information about Clean Energy and all L&I rulemaking.

Permanent Rule

Clean Energy: Labor Standards for Tax Incentives
Chapter 296-140 WAC, Clean Energy Labor Standards Certification

See Clean Energy and all L&I rulemaking history.

Questions? Call 360-902-5335 and press option 4, or email CleanEnergyReview@Lni.wa.gov.