Editor’s Note: This column was written by Landan Dory and was originally posted on the North Star Brokerage & Advisory website.
If you own an RV or mobile home park in Texas, you may be unknowingly paying sales tax on electricity — when you don’t have to.
Texas law provides a sales tax exemption on electricity for properties where the majority of electricity is used for long-term residential purposes. This exemption can reduce your monthly utility expenses and even allow you to recoup years of overpaid taxes. Here’s how it works — and how to take advantage of it.
What Is the Sales Tax Exemption for Electricity?
Under Texas Administrative Code § 3.295, electricity used for residential purposes is exempt from sales tax if:
- Tenants stay for more than 30 consecutive days, and
- More than 50% of the electricity (measured through a single meter) is consumed by these long-term residents.
This is known as the “predominant use” exemption.
If your RV or mobile home park qualifies, you can eliminate sales tax on your electricity bills going forward — and potentially request a refund for up to four years of previously paid taxes.
Who Qualifies?
Your park may qualify if:
- You have long-term guests (30-plus day stays).
- Your utility meter serves both long-term and short-term tenants, but the majority of electricity is used by long-term residents.
- You’re the utility account holder (typically the park owner/operator).
Even parks with a mix of long- and short-term guests may qualify — as long as over 50% of electricity is for long-term use.
