Solar Guide

The New York Solar Equipment Tax Credit is a state tax incentive that helps homeowners reduce the cost of going solar. This credit allows you to claim 25% of your qualified solar energy system equipment costs, up to a maximum credit of $5,000. The solar system must be installed at your primary residence in New York State and used for heating, cooling, hot water, or electricity generation.

You can qualify for this credit in three ways: purchasing solar equipment outright, entering a lease agreement for solar equipment, or signing a power purchase agreement (PPA) of at least 10 years to buy electricity from solar panels you don’t own. While this is a non-refundable credit (meaning it can only reduce your tax liability to zero), any unused portion can be carried forward for up to five years, giving you flexibility to use the full benefit over time. To claim this credit, you’ll need to file Form IT-255 with your New York State tax return.

New York’s Property Tax Exemption for solar energy systems allows homeowners to avoid paying property taxes on the increased value that solar panels add to their home. When you install a solar system, it typically increases your home’s assessed value, but this exemption protects you from paying higher property taxes on that added value for 15 years.

The financial benefit varies based on your home’s tax rate and the value your solar system adds, but it can save hundreds to thousands of dollars annually in property taxes. For example, if your solar system adds $20,000 to your home’s value and your property tax rate is 2%, you could save $400 per year in property taxes. The exemption covers solar energy systems, wind systems, and several other renewable energy technologies including battery storage systems.

To qualify, your system must be constructed between January 1, 1991 and January 1, 2030. However, there’s an important catch: this exemption is subject to “local option,” meaning your county, city, town, village, or school district can choose to opt out of offering this benefit. You’ll need to check with your local tax authorities to confirm the exemption is available in your area. Additionally, some jurisdictions may require you to enter into a Payment in Lieu of Taxes (PILOT) agreement, which could reduce or eliminate the benefit.

New York’s Sales Tax Exemption for residential solar energy systems helps homeowners save money by eliminating sales tax on solar equipment purchases and installation. This state-level incentive has been available since 2005 and automatically removes the 4% New York State sales tax and the additional 3/8% Metropolitan Commuter Transportation District tax from your solar investment.

The financial benefit varies by location since local jurisdictions can choose whether to participate. In areas that provide the full exemption (like Albany County, Erie County, Nassau County, Suffolk County, and New York City), you pay zero sales tax on your solar system. However, in counties that haven’t enacted the local exemption, you’ll still pay local sales tax rates ranging from 1.5% to 4.5%. For example, on a $20,000 solar system in a fully participating county, you could save $875 in combined state and local taxes.

This exemption applies to residential solar energy systems equipment and installation, with no income requirements or application process needed. The tax savings happen automatically at the point of purchase when you buy from qualified solar installers. There are no expiration dates or deadlines mentioned for this incentive, making it a reliable long-term benefit for New York homeowners considering solar energy.

The NY-Sun Program is New York State’s comprehensive solar incentive initiative that provides financial support to make solar installations more affordable for homeowners, businesses, and communities across the state. Administered by NYSERDA (New York State Energy Research and Development Authority) in partnership with local utilities, this program offers direct cash incentives to reduce the upfront cost of installing solar panels on your property.

The program uses a regional block structure that divides New York into three main areas: Con Edison territory, Long Island, and Upstate regions. Each region has allocated megawatts (MW) of solar capacity eligible for incentives, with incentive amounts decreasing as each block fills up. While the source material doesn’t specify exact dollar amounts, real-time incentive levels are available through online dashboards for each region. The program is designed to gradually phase out incentives as the solar market becomes more self-sustaining, so acting sooner rather than later may secure higher incentive amounts. Homeowners should check the current incentive rates for their specific region and work with participating contractors to ensure they receive the available financial support for their solar installation.

Net metering in New York allows homeowners with solar panels to receive credit for excess electricity they generate and send back to the power grid. When your solar system produces more energy than your home uses, that extra power flows to the grid and you receive a 1:1 credit – meaning you get full retail value for every kilowatt-hour (kWh) you export. This credit can then offset electricity you use from the grid when your panels aren’t producing enough power, like at night or during cloudy days.

The financial benefit varies by utility company, but all major New York utilities offer this 1:1 credit system. However, there is a monthly fee called the Contribution Benefits Charge (CBC) that ranges from $0.85 to $1.45 per kW of your solar system’s capacity, depending on your utility provider. For example, if you have a 10 kW system with National Grid, you’d pay $14.50 per month ($1.45 x 10 kW). Any unused credits roll over month to month and year to year for up to 20 years, after which they expire. Importantly, utility companies will not issue cash payments for excess credits – they can only be used to offset future electricity bills.