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 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 have chosen to also exempt solar purchases 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 systems. However, residents in areas like Monroe County or Niagara County still pay 4% local sales tax, even though they’re exempt from state taxes. The exact savings vary by location, but on a typical $20,000 solar system, you could save anywhere from $800 to $1,600 or more depending on your local tax rates.

This exemption applies specifically to residential solar energy systems equipment and installation. There are no income requirements, system size limits, or application deadlines – the exemption is automatic at the point of sale. However, it’s important to verify with your solar installer that they’re properly applying the exemption, and check the current tax rates for your specific county and city since local jurisdictions can change their policies over time.

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 help offset the upfront costs of installing solar panels on your property.

The program uses a unique “MW Block” structure that divides New York 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 material doesn’t specify exact dollar amounts, incentives are allocated in megawatt blocks until fully subscribed in each region. The program is designed to phase out incentives gradually as the solar market becomes more self-sustaining, so acting sooner rather than later is important to secure higher incentive levels.

NY-Sun covers residential, commercial, and community solar projects, making it accessible to various property types and situations. The program operates on a first-come, first-served basis within each regional block, and homeowners should work with participating contractors to access these incentives. Since incentive levels decrease as each block fills up, there’s a time-sensitive element to maximizing your savings through this program.

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 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.