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 allows homeowners to avoid paying property taxes on the increased value that solar panels add to their home. When you install a solar system, your home’s assessed value typically increases, 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 assessment, but it can save you hundreds to thousands of dollars annually. For example, if solar panels increase your home’s assessed value by $20,000 and your property tax rate is 2%, you would save $400 per year in property taxes. The exemption applies to solar energy systems, wind systems, and several other renewable energy technologies including battery storage systems.

To qualify, your renewable energy system must be constructed between January 1, 1991 and January 1, 2030. There are no income requirements or property location restrictions. However, 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. Some jurisdictions may also require you to enter into a payment-in-lieu-of-taxes (PILOT) agreement, though they must notify you within 60 days of receiving written notice of your intent to install a system.

New York’s Sales Tax Exemption for residential solar energy systems removes state sales tax from solar equipment purchases and installations. This exemption eliminates the standard 4% New York State sales tax, plus an additional 3/8% tax in the Metropolitan Commuter Transportation District (which includes New York City and surrounding counties). The exemption has been in effect since 2005 and applies to all residential solar energy system equipment and installation services.

The financial benefit varies by location since local jurisdictions can choose whether to participate. In areas that provide the full exemption (like New York City, Nassau County, Suffolk County, and many others), homeowners pay zero sales tax on their solar purchase. However, in counties that haven’t enacted the local exemption, homeowners still pay local sales tax rates ranging from 1.5% to 4.5%. For example, a $30,000 solar system in New York City would save $1,312.50 in taxes, while the same system in a non-participating county might only save the state portion. There are no income requirements, deadlines, or time limitations – any New York homeowner installing residential solar equipment automatically qualifies for at least the state tax savings.

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 approach with three main areas: Con Edison territory, Long Island, and Upstate New York. Each region has allocated megawatts (MW) of solar capacity eligible for incentives, organized into blocks that decrease in value as more solar is installed. This means incentive amounts change over time and vary by location, with real-time information available through online dashboards. The program is designed to gradually phase out incentives as the solar market becomes self-sustaining, so acting sooner rather than later can help you secure higher incentive amounts. Homeowners should check the current incentive levels for their specific region and work with participating contractors to ensure they receive the available benefits 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 be used to offset electricity you draw 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 in CBC fees. Any unused credits roll over month to month and year to year for up to 20 years, after which they expire. The utility will not issue cash payments for excess credits – they can only be used to offset future electricity bills.