Buffalo, 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 energy generated by equipment you don’t own. 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 the credit isn’t refundable (meaning you won’t receive a cash payment if the credit exceeds your tax liability), any unused portion can be carried forward and applied to your state taxes for up to five years. This carryover feature ensures you can benefit from the full credit amount even if your tax liability in the installation year is less than the credit value.

To claim this incentive, you’ll need to complete Form IT-255 (Claim for Solar Energy System Equipment) when filing your New York State income tax return. Keep all documentation related to your solar purchase, lease agreement, or power purchase agreement, as you’ll need these records to support your claim.

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 covers the full increase in your home’s assessed value that’s directly attributable to the solar system for 15 years from installation.

To qualify, your solar system must be constructed between January 1, 1991 and January 1, 2030. The exemption is subject to local option, meaning your county, city, town, village, or school district must choose to allow it—they can opt out by passing a local law or resolution. It’s important to check with your local tax assessor to confirm the exemption is available in your area. Some jurisdictions may also require you to enter into a payment-in-lieu-of-taxes (PILOT) agreement, though they must notify you of this requirement within 60 days of receiving written notice of your intent to install solar. The exemption also covers other renewable technologies including wind energy systems, battery storage systems, and fuel cells installed after January 1, 2018.

New York’s Sales Tax Exemption removes state sales tax from the purchase and installation of residential solar energy systems. Since 2005, this exemption has saved homeowners the 4% New York State sales tax, plus an additional 3/8% tax if you live in the Metropolitan Commuter Transportation District (MCTD). Many counties and cities across New York also exempt solar purchases from local sales taxes, though this varies by location.

The financial benefit depends on where you live in New York. In counties that fully participate in the exemption—such as Albany, Broome, Erie, Nassau, Suffolk, and New York City—you’ll pay zero sales tax on your solar equipment and installation. In counties that haven’t enacted the local exemption, you’ll still save on the state portion but will pay local sales tax rates that typically range from 3% to 4.5%. For a typical residential solar system costing $25,000, this exemption can save you between $1,000 and $2,000 or more, depending on your location.

This exemption applies to any homeowner purchasing and installing a residential solar energy system in New York State. There are no income requirements, system size limits, or application deadlines—the exemption is automatically applied at the point of sale. Your solar installer should handle this exemption when processing your purchase, so you won’t need to file any additional paperwork. The exemption remains in effect indefinitely unless the state changes the law, making it a reliable benefit for New York homeowners going solar.

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. As each block fills up with solar projects, the incentive amount decreases for the next block, encouraging earlier adoption. You can check the current incentive levels for your area in real time 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 can help you navigate the application process and ensure your system qualifies. The incentives remain available until all funding blocks in your region are fully subscribed, so timing matters—incentive levels decrease as more people in your area go solar. Additional incentive adders may be available for qualifying projects, such as those serving affordable housing or meeting prevailing wage requirements. It’s important to move forward while incentives are still available in your region, as the program is designed to phase out as the solar market becomes self-sustaining.

Net metering in New York allows you to receive credit for the excess solar energy your system sends back to the electric grid. When your solar panels produce more electricity than your home uses, that surplus power flows to the grid, and you receive credits on your utility bill. Each month, your exported solar production is netted against your total electricity consumption at a 1:1 rate, meaning you receive full retail value for every kilowatt-hour you send to the grid.

The financial benefit works through a credit system that varies slightly depending on your rate plan. If you’re on a standard (non-time-of-use) rate schedule, excess credits carry over month to month as per-kilowatt-hour credits. If you’re on a time-of-use rate schedule, credits carry over as monetary credits. These credits roll over indefinitely for 20 years, helping offset future electric bills during months when your solar system produces less than you consume. It’s important to note that you won’t receive a check for unused credits—they remain as bill credits only.

All New York homeowners with solar systems are eligible for net metering through their local utility company, which includes Central Hudson Gas & Electric, Orange & Rockland, National Grid, Con Edison, NYSEG, RGE, and PSEG Long Island. However, there is a monthly Contribution Benefits Charge (CBC) that varies by utility, ranging from $0.85 to $1.45 per kilowatt of your system’s DC capacity. For example, if you have a 10 kW system with National Grid, you’d pay approximately $14.50 per month in CBC fees. This fee helps support the grid infrastructure and is separate from your net metering credits.