Rochester, 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 10-year or longer power purchase agreement for solar energy. The solar system must use solar radiation to produce energy for heating, cooling, hot water, or electricity at your principal New York State residence.

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 is installed, covering the full increase in your home’s assessed value that’s attributable to the solar energy system.

To qualify, your solar system must be constructed between January 1, 1991 and January 1, 2030. This exemption is subject to local option, which means your county, city, town, village, or school district can choose whether to offer it. You’ll want to check with your local tax assessor to confirm the exemption is available in your area. It’s important to note that construction is considered to have begun when you sign a contract or interconnection agreement with your utility company. If your local jurisdiction hasn’t opted out of the program, they may still request a payment in lieu of taxes (PILOT) agreement—but they must notify you in writing within 60 days of receiving your written notice of intent to install a qualifying system. If they don’t respond within that timeframe, no PILOT payments can be required.

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 paying the 4% New York State sales tax and the additional 3/8% Metropolitan Commuter Transportation District (MCTD) tax that applies in the New York City metro area. This exemption applies automatically at the time of purchase, reducing your upfront costs without requiring any additional paperwork or applications.

The local sales tax exemption varies by county and city. Many jurisdictions—including New York City, Albany County, Erie County, Nassau County, Suffolk County, and Westchester County (with some city exceptions)—provide full exemption from local sales tax as well, meaning you pay 0% sales tax total. However, other counties like Monroe, Onondaga, and Niagara still charge their local rates (typically 4%) even though the state portion is exempt. The total savings depends on your location, but in areas with full exemption, you could save 8-8.375% on your entire solar system cost.

This exemption is available to all homeowners purchasing residential solar equipment in New York State. There are no income requirements, system size limits, or application deadlines. The exemption remains in effect indefinitely unless changed by future legislation. Your solar installer should automatically apply this exemption at the point of sale, so the reduced price will be reflected in your contract and final invoice.

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 all regions of New York State, including areas served by Con Edison, Long Island utilities, and upstate providers.

The program uses a “megawatt block” structure, which means incentive amounts decrease over time as each block of solar capacity gets filled. Incentive levels vary by region and sector, with real-time availability shown on interactive dashboards. The specific dollar amount you’ll receive depends on your location and when you reserve your incentive—earlier participants typically receive higher incentive rates. This declining block structure is intentional, designed to phase out incentives as the solar market becomes more self-sustaining in New York.

Residential homeowners, businesses, multifamily properties, and community solar projects are all eligible for NY-Sun incentives. To participate, you’ll need to work with a NY-Sun participating contractor who will help you navigate the application process and reserve your incentive. It’s important to act sooner rather than later, as incentives remain available only until all blocks within your region are fully subscribed. Once a block fills up, the incentive rate drops to the next lower level, and eventually incentives will phase out completely as the program reaches its goals.

Net metering in New York allows you to receive credit for the excess solar energy your system produces and sends back to the electric grid. When your solar panels generate more electricity than your home uses, that surplus power flows to the grid, and you receive credits on your electric bill. Each month, your utility company calculates the difference between the electricity you consumed and the electricity you exported—essentially running your meter backwards when you’re producing more than you’re using.

New York offers 1:1 net metering, meaning you receive full retail rate credit for every kilowatt-hour (kWh) you send to the grid. If you don’t use all your credits in a given month, they roll over indefinitely for up to 20 years, giving you flexibility to use them during months when your solar production is lower (like winter). Credits are tracked either as per-kWh credits for standard rate schedules or as monetary credits for time-of-use (TOU) rate schedules. It’s important to note that all New York utilities charge a monthly Contribution Benefits Charge (CBC), which ranges from $0.85 to $1.45 per kW-DC of your system size, depending on your utility provider. This fee helps support the state’s renewable energy programs. After 20 years, any unused credits expire and are not paid out as cash.