New York Solar Panels

New York homeowners can claim a state income tax credit equal to 25% of the cost of a qualifying solar energy system installed at their primary residence, capped at $5,000. This credit directly reduces the amount of state income tax you owe — dollar for dollar — making it one of the most valuable state-level solar incentives in the country. The credit is claimed using Form IT-255 when you file your New York State income tax return.

One of the most homeowner-friendly features of this credit is that you do not need to purchase your system outright to qualify. If you enter into a solar lease or power purchase agreement (PPA) with a term of at least 10 years, you are still eligible to claim the credit. This opens the door for renters and homeowners who prefer a $0-down solar option to still benefit from the state tax incentive.

If the full credit amount exceeds your state tax liability in the year of installation, you are not penalized — any unused portion can be carried forward for up to five consecutive tax years until the full credit is used. This makes the credit accessible even for homeowners with modest annual tax bills.

The NY-Sun Megawatt Block Incentive Program, administered by NYSERDA, provides upfront rebates applied directly to the cost of a solar installation by your NY-Sun-approved contractor — meaning you never see the money yourself; it simply reduces what you pay. As of 2026, the standard-income residential blocks have closed in both the Con Edison (NYC/Westchester) and Upstate regions, so these rebates are currently available only to income-eligible households.

Low-income households at or below 80% of Area Median Income (AMI) can qualify for the Affordable Solar Residential Incentive, which offers $0.80 per watt of installed capacity in the Upstate and Con Edison regions, and $0.40 per watt on Long Island. For a typical 7 kW system, that translates to $5,600 off the installation cost upfront — a substantial reduction. For a family of four in Upstate New York, the income threshold is approximately $64,000 per year as of 2026.

You do not apply for this rebate yourself. Your solar installer must be a participating NY-Sun contractor, and they handle the entire application and income verification process on your behalf. The rebate is subtracted from your total installation cost before you pay anything. To find a participating contractor, use NYSERDA’s official contractor directory at nyserda.ny.gov.

Under New York Tax Law §1115(ee), the sale and installation of residential solar energy systems — including solar panels, inverters, mounting hardware, and related equipment — are fully exempt from the 4% New York State sales tax. Many local jurisdictions, including New York City, also extend this exemption to their local sales and use taxes, meaning combined savings can range from 7% to nearly 9% of your total system cost depending on where you live.

On a typical $25,000 solar installation, this exemption can save a homeowner between $1,750 and $2,200 or more, depending on the combined state and local tax rate in your area. This is a passive savings — no application or paperwork is required from the homeowner. Your solar installer is legally required to apply the exemption at the point of sale and should not be charging you sales tax on qualifying solar equipment or installation labor.

If you receive an invoice that includes sales tax on solar panels or installation, ask your contractor to correct it, as the exemption is built directly into state tax law and applies automatically to qualifying residential systems statewide.

Effective June 1, 2024, New York State extended its sales tax exemption to cover residential energy storage systems — including popular products like the Tesla Powerwall, Enphase IQ Battery, and FranklinWH — installed at one-, two-, or three-family residences. Both the equipment and the installation labor are exempt from state and local sales and use taxes, providing meaningful savings on what can be a $10,000–$20,000 investment.

Important: The current battery storage sales tax exemption is scheduled to expire on May 31, 2026. The Governor’s 2026–2027 budget has proposed extending this exemption through June 1, 2028, but homeowners should verify the current status of the extension before installation. If the extension is not enacted, battery storage systems installed after May 31, 2026 may be subject to standard sales tax rates.

Like the solar sales tax exemption, no action is required from the homeowner — your installer should automatically apply the exemption at the point of sale. This exemption applies statewide and covers both standalone battery systems and those installed alongside solar panels.

New York’s Real Property Tax Law Section 487 provides one of the most powerful long-term solar incentives in the state: a 15-year, 100% property tax exemption on any increase in your home’s assessed value attributable to a solar energy system. In practical terms, if your solar installation adds $20,000–$30,000 in value to your home, your property tax bill will not increase by a single dollar for 15 years as a result. The exemption also covers battery storage systems approved by NYSERDA when installed alongside solar.

To claim the exemption, homeowners must file Form RP-487 (Application for Tax Exemption of Solar, Wind, or Certain Other Energy Systems) with their local assessor on or before the taxable status date in their municipality — typically January 5th for most jurisdictions. The exemption takes effect in the following tax year. In many municipalities, the process is straightforward, but it does require proactive filing.

One important caveat: while the exemption is available statewide, individual counties, cities, towns, villages, and school districts have the right to opt out. The five largest cities — New York City, Buffalo, Rochester, Syracuse, and Yonkers — are governed by separate rules. Before relying on this exemption, confirm with your local assessor’s office that your municipality participates. Even if your town has opted out, you may still be exempt from county or school district tax increases.

New York City offers a Solar Electric Generating Systems (SEGS) Property Tax Abatement that allows eligible NYC property owners to reduce their annual property tax bill by 7.5% of the total solar system cost each year for four consecutive years — a total abatement of 30% of the system cost. Unlike a tax credit, this abatement appears as a direct reduction on your NYC property tax bill. For a $30,000 solar system, that’s up to $9,000 in total property tax savings over four years.

The abatement is capped at $62,500 per year (or $250,000 total), and cannot exceed your actual property tax liability for the year. To qualify, the solar system must be installed between January 1, 2024 and January 1, 2035. The application must be filed through a registered architect or professional engineer with the NYC Department of Buildings, so homeowners should factor in this professional filing requirement when planning their project.

This abatement is separate from and can be stacked with the New York State Solar Tax Credit, making it an especially powerful incentive for NYC homeowners. Because NYC has opted out of the statewide RPTL Section 487 property tax exemption, the SEGS abatement serves as the city’s equivalent program for solar property tax relief.

NYSERDA’s Residential Energy Storage Incentive Program provides upfront rebates for homeowners who install a qualifying battery storage system through an approved contractor. The rebate amount depends on your utility territory: customers of upstate utilities (National Grid, NYSEG, Central Hudson, Orange & Rockland) receive $200 per kWh of usable capacity, while customers in the Con Edison territory (NYC, Westchester, and Rockland County) receive $250 per kWh. For a 13.5 kWh battery like the Tesla Powerwall, that equals $2,700 upstate or $3,375 in the Con Edison region, with total household incentives capable of exceeding $6,000 for larger systems up to 25 kWh.

The program operates on a declining block structure — as each funding tier is fully subscribed, the incentive rate drops for the next block. Homeowners who act sooner lock in higher rebate rates. As of early 2026, approximately one-third of the current rebate block has been claimed, so availability remains but is not unlimited. The rebate is applied directly by your installer and subtracted from your installation cost upfront.

Important: Effective April 1, 2026, enrollment in your utility’s Bring Your Own Battery (BYOB) demand response program is required to receive the NYSERDA battery incentive. Under BYOB, your utility may dispatch stored energy from your battery a limited number of times per year during peak demand periods. If your battery manufacturer is not yet enrolled in the BYOB program, a temporary exception applies through June 1, 2026. Contact NYSERDA at [email protected] or visit the program page for current enrollment details.

PSEG Long Island (serving LIPA customers on Long Island) offers its own battery storage rebate program, providing $250 per kWh of installed usable storage capacity. For a 13.5 kWh battery like the Tesla Powerwall, that’s a rebate of $3,375, with a maximum benefit of $6,250 per household for larger systems. Applications for this program are submitted through the NY-Sun platform, and the installation must be completed by a participating NY-Sun contractor.

In exchange for the rebate, participating customers must enroll in PSEG Long Island’s Dynamic Load Management (DLM) demand response program. Under DLM, PSEG Long Island can dispatch stored energy from your battery approximately 10 times per year during four-hour windows (2:00 p.m. to 7:00 p.m.) between May 1 and September 30. This helps the utility manage peak grid demand while you still benefit from your battery for backup power and bill savings the rest of the time.

This program is available exclusively to PSEG Long Island / LIPA customers and is separate from the NYSERDA statewide battery incentive program. Long Island homeowners should contact PSEG Long Island directly or visit psegliny.com to confirm current program availability, as funding is limited and subject to change.

When you install solar in New York in 2026, you can choose between two billing structures for the excess electricity your panels send to the grid. The first — and most popular for most homeowners — is Phase One Net Metering, which credits you at the full retail electricity rate for every kilowatt-hour you export. Credits roll over month to month for a 12-month true-up period. Crucially, any solar system interconnected in New York today locks in net metering for a full 20 years, providing long-term billing certainty. Note that all solar customers also pay a monthly Customer Benefit Contribution (CBC) charge, which is slightly higher under net metering than under VDER.

The alternative is the Value of Distributed Energy Resources (VDER) tariff, also called the Value Stack. Instead of a flat retail-rate credit, VDER compensates you based on five components: locational marginal pricing (LBMP), capacity value (ICAP), environmental value (E), demand reduction value (DRV), and locational system relief value (LSRV). VDER rates can be higher or lower than retail depending on your location and time of export, and the CBC charge is lower under VDER than under net metering. New York is gradually transitioning toward VDER as the default compensation mechanism.

For most residential homeowners with systems under 25 kW, net metering is currently the better financial choice, but it depends on your utility territory and usage profile. NYSERDA offers a free Value Stack Tariff Calculator at utilities.nyserda.ny.gov/ValueStack to help you estimate your expected compensation under each option before making a decision. Consult with your NY-Sun contractor or utility to determine which tariff best fits your situation.

Community solar allows any New Yorker — including renters, condo owners, and homeowners whose roofs aren’t suitable for solar — to benefit from solar energy without installing a single panel. Subscribers sign up for a share of a larger, off-site solar project and receive credits on their monthly utility bill for their portion of the electricity generated. New York leads the nation in community solar capacity, with more than 800 active community solar projects across the state.

Subscribers typically save between 5% and 10% on their annual electricity costs through bill credits, with no upfront installation costs or long-term equipment commitments. Enrollment is generally free, and most programs offer month-to-month or short-term contracts. Credits appear directly on your utility bill each month, reducing what you owe to your utility.

Low- and moderate-income New Yorkers may qualify for additional savings through the Statewide Solar for All (S-SFA) program, which provides enhanced bill credits and electric bill assistance through community solar subscriptions specifically designed for income-eligible households. To find available community solar projects in your area, visit NYSERDA’s community solar portal or contact your utility directly.

New York’s Historic Homeownership Rehabilitation Tax Credit provides a 20% state income tax credit on the cost of qualifying rehabilitation work — including solar panel installations — completed on owner-occupied homes located within historic districts listed on the National Register of Historic Places. The maximum credit is $50,000, making it a potentially significant additional incentive for homeowners in eligible historic neighborhoods who are adding solar to their homes as part of a broader rehabilitation project.

To qualify, the property must be your primary residence, located within a certified historic district, and the rehabilitation work must meet certain standards. Solar installations that are part of a qualifying rehabilitation project can be included in the total eligible expenditures used to calculate the 20% credit. This credit can be stacked with the New York State Solar Tax Credit and other available incentives.

Homeowners interested in this credit should consult with a tax professional and verify that their property and planned improvements meet all eligibility requirements before proceeding. The credit is claimed on your New York State income tax return, and documentation of the historic district designation and qualifying expenditures will be required.