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) that spans at least 10 years for solar-generated electricity. 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 is a state tax benefit that protects homeowners from paying higher property taxes when they install solar panels or other qualifying renewable energy systems. This exemption ensures that adding solar to your home won’t increase your property tax bill, even though the solar system adds value to your property.

The financial benefit exempts you from paying property taxes on the increased assessed value that your solar system adds to your home for 15 years. For example, if your solar installation increases your home’s assessed value by $15,000, you won’t pay property taxes on that $15,000 increase during the exemption period. However, you’ll still be responsible for any special assessments or levies that may apply.

To qualify, your property must contain an eligible solar energy system, wind energy system, or other approved renewable energy technologies like micro-hydroelectric, fuel cell, or energy storage systems. The system must be constructed after January 1, 1991 and before January 1, 2030. There are no specific ownership or property location requirements, making this benefit available to most homeowners who install qualifying systems.

Important considerations include that 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. Additionally, some local jurisdictions may 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 a qualifying system. The exemption automatically expires after 15 years, at which point the full assessed value of your property, including the solar system, will be subject to property taxes.

New York’s Sales Tax Exemption for residential solar energy systems removes state sales tax from your solar purchase and installation. This means you won’t pay the standard 4% New York State sales tax or the additional 3/8% tax that applies in the Metropolitan Commuter Transportation District (which includes New York City and surrounding counties). The exemption has been available since 2005 and applies to all residential solar equipment and installation services.

The local tax savings depend on where you live in New York. Some counties and cities provide full exemption from their local sales taxes (bringing your total tax rate to 0%), while others still charge their local rates. For example, residents in Albany County, Erie County, Nassau County, Suffolk County, and New York City pay no sales tax at all on solar installations. However, residents in areas like Monroe County or Niagara County still pay 4% local tax, even though they’re exempt from state taxes. The savings can be significant – on a typical $25,000 solar system, you could save $1,000 to $2,000 or more depending on your location.

This exemption applies specifically to residential solar energy systems equipment and installation. There are no income requirements, deadlines, or application processes – the tax exemption is automatically applied at the point of sale when you purchase qualifying solar equipment. Your solar installer should handle this exemption for you during the purchase process, so make sure they’re applying the correct tax rates for your specific location in New York.

The NY-Sun Program is New York State’s comprehensive solar incentive initiative that provides upfront cash rebates to homeowners who install solar panel systems. This state-funded program is designed to make solar energy more affordable and accessible across New York by offering direct financial incentives that reduce the initial cost of going solar.

The program operates through a unique “MW Block” system that divides the state into three regions (ConEdison, Long Island, and Upstate), with each region offering different incentive amounts that decrease over time as solar adoption grows. While the source doesn’t specify exact dollar amounts, incentives are available until all allocated megawatts in each regional block are fully subscribed. The program is intentionally designed to phase out incentives as the solar market becomes more self-sustaining, meaning earlier participants typically receive higher rebate amounts.

Homeowners should know that incentive levels change in real-time based on demand and are available on a first-come, first-served basis until each regional block is exhausted. To participate, you’ll need to work with a NY-Sun participating contractor, and the specific incentive amount you’ll receive depends on your location within New York State. Since this is a limited-time opportunity with decreasing benefits, homeowners interested in solar should act promptly to secure the highest available incentives in their area.

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 rate value for every kilowatt-hour you export. These credits can then be used to offset your electricity costs during times when your solar 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 solar fee called the Contribution Benefits Charge (CBC) that ranges from $0.85 to $1.45 per kilowatt of your system’s capacity. For example, if you have a 10 kW solar system with National Grid, you’d pay about $14.50 per month in CBC fees. Your net metering credits roll over month to month and year to year for up to 20 years, giving you long-term flexibility to use the energy you’ve generated. The utility will not issue cash payments for excess credits – they can only be used to offset future electricity bills.