Albany, NY Solar Panels

The New York Solar Energy System Equipment Credit is a state tax credit that rewards homeowners who invest in solar energy for their primary residence. You can claim this credit if you purchase solar equipment, lease solar equipment under a written agreement, or enter into a long-term power purchase agreement (at least 10 years) for solar-generated electricity. The solar system must be installed at your principal residence in New York State and used to produce energy for heating, cooling, hot water, or electricity.

This credit is worth 25% of your qualified solar energy system equipment costs, up to a maximum of $5,000. While this is a non-refundable credit (meaning it can only reduce your tax liability to zero, not generate a refund), any unused portion can be carried forward and applied to your state taxes for up to five years. To claim this benefit, you’ll need to complete Form IT-255, Claim for Solar Energy System Equipment, when filing your New York State income tax return.

New York’s Property Tax Exemption protects homeowners from paying higher property taxes when they install solar panels or other qualifying renewable energy systems. When you add solar to your home, your property value typically increases—but with this exemption, your property taxes won’t go up to reflect that added value. The exemption lasts for 15 years from the date your system becomes operational, covering the full increase in your home’s assessed value that’s attributable to the solar installation.

To qualify, your solar system must be constructed between January 1, 1991 and January 1, 2030. Construction is considered to have begun when you sign a contract or interconnection agreement with your utility company (or when you make a required deposit). This exemption is subject to local option, meaning your county, city, town, village, or school district can choose whether to allow it. It’s important to check with your local tax assessor to confirm the exemption is available in your area. Some municipalities may also require you to enter into a payment-in-lieu-of-taxes (PILOT) agreement, though they must notify you of this intent within 60 days of receiving written notice of your project. The exemption applies to general property taxes but does not cover special assessments or special ad valorem levies.

New York’s Sales Tax Exemption removes state sales tax from the purchase and installation of residential solar energy systems. Since 2005, homeowners have been exempt from the 4% New York State sales tax and the 3/8% Metropolitan Commuter Transportation District (MCTD) tax that applies in the New York City metro area. This means you won’t pay these state-level taxes when buying and installing your solar equipment.

The exemption also applies to local sales taxes in many New York counties and cities, though this varies by location. Many areas—including New York City, Nassau County, Suffolk County, Erie County, and dozens of other jurisdictions—offer complete exemption from both state and local sales taxes (0% total). However, some counties have chosen not to adopt the local exemption, meaning you’ll still pay local sales tax rates ranging from 1.5% to 4.5% in those areas. For example, Monroe County charges 4% local tax, while areas like Albany County and Broome County charge nothing.

All New York homeowners installing residential solar energy systems are eligible for the state-level exemption. There are no income requirements, system size limits, or application deadlines—the exemption applies automatically at the time of purchase. The exemption has no expiration date and remains in effect under current law. To benefit from local tax exemptions, you simply need to live in a jurisdiction that has enacted the local exemption, which your solar installer can confirm based on your address.

The NY-Sun Program is a statewide initiative administered by NYSERDA (New York State Energy Research and Development Authority) that provides financial incentives to help New York homeowners, businesses, and organizations install solar panel systems. This program operates through a public-private partnership designed to make solar energy more accessible and affordable across the state by offering upfront cash incentives that reduce your installation costs.

The incentive amounts vary based on your location within New York State and are structured using a “megawatt block” system. The state is divided into three regions (Con Edison territory, Long Island, and Upstate), and each region has designated blocks of funding with specific incentive levels. As more solar projects are completed in your area and blocks fill up, the incentive amount gradually decreases—meaning earlier adopters typically receive higher incentives. You can check real-time incentive levels for your specific region through NYSERDA’s online dashboards. The program is available for residential homes, as well as multifamily properties, businesses, and community solar projects.

To participate, you’ll need to work with a NY-Sun participating contractor who will handle the incentive application process on your behalf. The program will continue until all allocated funding blocks are fully subscribed, so incentives remain available on a first-come, first-served basis until your region’s funding is exhausted. Additional “adder” incentives may be available for projects that meet specific criteria, such as serving affordable housing or low-to-moderate income communities. Since incentive levels decrease over time as the solar market matures, it’s beneficial to explore your options sooner rather than later.

Net metering in New York allows you to receive credit for the excess solar energy your system sends to the grid. When your solar panels produce more electricity than your home uses, that surplus power flows back to the utility grid, and you receive credits on your electric bill. Each month, your solar production is netted against your total electricity consumption, meaning you only pay for the difference between what you used and what you generated.

New York offers 1:1 net metering across all major utilities, which means you receive full retail rate credit for every kilowatt-hour (kWh) you export to the grid. The way credits are applied depends on your rate schedule: if you’re on a standard rate plan, you’ll receive per-kWh credits that roll over month to month; if you’re on a time-of-use (TOU) rate schedule, you’ll receive monetary credits instead. These credits roll over indefinitely for 20 years, though they will expire after that period and cannot be cashed out as a check.

All residential solar customers in New York are eligible for net metering through their utility company. However, there is a monthly Contribution Benefits Charge (CBC) that varies by utility, ranging from $0.85 to $1.45 per kW-DC of your system’s capacity. For example, if you have a 10 kW system with PSEG Long Island, you would pay an additional $8.50 per month, while the same system with National Grid would cost $14.50 per month. This fee helps support the grid infrastructure but is typically much smaller than the savings you’ll receive from your solar credits.