New York solar incentives, tax credits and rebates

Residential solar panel incentives in New York

The federal solar investment tax credit (ITC) is the biggest incentive for most people going solar in New York. The ITC is worth 30% of the system’s total cost — including equipment, labor, and permits — toward what you owe on federal income taxes.

For example, if you spend $10,000 installing a solar panel system, the ITC is worth $3,000. If in the year your system becomes operational, you owe $15,000 in taxes, the ITC reduces what you owe to $12,000. You don’t get these benefits automatically, though. You must claim your solar equipment, labor and permits on your federal taxes for the same year you started using your system on Form 5695.

The ITC drops to 26% in 2033 and 22% in 2034.

Don’t get confused: the ITC is a credit, meaning it directly decreases the amount of taxes you owe. This is different from a deduction, which reduces your taxable income. Nor is it a rebate or a refund. It only offsets your tax liability; you can't take advantage of the ITC if you don’t owe taxes in the first place. However, the credit rolls over to the next tax year if you don’t use the full amount.

Solar tax breaks in New York

New York has additional tax credits, exemptions and abatements for residents investing in solar technology.

• State tax credit: If you install solar panels or water heaters, you can get 25% of the costs back, up to $5,000. This incentive is open to all residential customers, whether you bought the system, leased it or signed a long-term power purchase agreement (PPA) of at least 10 years. The system size is capped at 25 kW for single-family homes and 50 kW for condos or co-ops.
• Solar sales tax exemption: If you buy and install a solar energy system for your property — whether you're a homeowner or not — you don't have to pay state sales tax or use tax on it. However, it doesn’t apply to solar equipment related to recreation uses, like for pool heating. Local governments also have the option to exempt you from other taxes on solar devices. This program doesn't currently have an expiration date.
• Local property tax exemption: You don't have to pay extra property taxes on the value it adds to your home for 15 years if you install a solar system or other renewable tech. This is a local option, so it doesn’t apply statewide. Some towns have decided not to offer this exemption. As of publishing, it’s set to expire in early 2025.
• Energy conservation improvements property tax exemption: If you get solar panels or solar water heaters, you don't have to pay taxes on the increased value of your home. This exemption covers the city property tax, school district tax and special property taxes, but not any special assessments. You can take advantage of this tax break whether you've got a single-family home or a small multi-unit building (up to 4 units). There's currently no expiration date.
• NYC property tax abatement: If you live in New York City and install solar panels or lithium-ion solar storage batteries, you can get a 7.5% property tax abatement on the costs of your system — up to a maximum of $62,500 in savings per year. That incentive expires in late 2034.
• NYC residential solar sales tax exemption: If you live in New York City and want to install a solar energy system in your home, you don't have to pay any sales tax on the equipment or the installation services. That's right: The city gives you a total tax exemption on going solar.
• Real property tax exemption for green buildings: The state of New York lets local governments offer tax breaks on "green" buildings certified as eco-friendly. The town or city can exempt the owners from paying real estate taxes if a building meets specific standards, like those set by LEED or Green Globes. The tax exemption amount depends on the certification level and how old the green features are. This is a local option — some places offer it, some don't.
• Energy conservation improvements property tax exemption: The state legislature passed a bill called Assembly Bill 260 that gives homeowners a 15-year property tax break if they install solar, wind or other renewable energy systems. This means you don't have to pay taxes on the increased value the renewable tech adds to your home for 15 years. This one isn't optional for local governments. As long as you live in New York, you should be able to take advantage of this deal. At publication, this exemption expires Jan. 1, 2025.

Residential solar loan programs

Here are some enticing New York State Energy Research and Development Authority (NYSERDA) and NY-Sun loan programs for solar panels or solar water heaters. Homeowners are required to complete a free energy assessment before they can qualify for NYSERDA loans. Loan approval also depends on your financial history, including your credit score.

• On-bill recovery loans: Customers of Central Hudson, ConEd, PSEG-Long Island, NYSEG, National Grid, Orange & Rockland or Rochester Gas & Electric can get a loan between $1,500 and $25,000  with terms between five and 15 years. You pay it back through your regular monthly utility bill.
• Smart energy loans: These are open to homeowners or their representatives. Amounts range from $1,500 to $25,000, with terms between five and 15 years.
• Renewable energy tax credit bridge loans: The NY-Sun Renewable Energy Tax Credit Bridge Loan and the NYSERDA Renewable Energy Tax Credit Bridge Loan are both short-term loan products that enable applicants to finance federal and state tax credits, as well as the NYC Real Property Tax Abatement, for eligible renewable energy system products. Loans typically range from $1,500 to $25,000 and have two-year terms. If you sell or transfer the property, you remain responsible for the loan balance.

NY-Sun PV rebate incentive program

This program is for low-income residents and small businesses. If you qualify, and you're in the ConEd or Upstate regions, you get 20 cents per watt of solar power installed until the program hits its goals. As of publishing, the Long Island region is all filled up, so no more incentives are available.

You can get this incentive even if you don’t own the solar panels (i.e., if you lease or enter a power purchase agreement). However, the whole system has to be brand new — no used parts allowed — and you have to guarantee its power output. The program expires December 30, 2030, or whenever the funding runs out, whichever comes first.

More solar incentives in New York

Check the DSIRE for the most comprehensive source of information about solar incentives and policies in New York.

What to know about net metering in New York

Sometimes, your solar panels might generate more electricity than your household can use. Net metering lets you sell that extra to the local power grid. Currently, New York is transitioning from its old net metering system to something called the Value of Distributed Energy Resources, sometimes referred to as the Value Stack or VDER.

With net metering, solar owners basically got paid the full retail price for any extra electricity they sent back to the grid. But under VDER, the rate you get paid is more variable and based on a bunch of different factors.

The good news is that you can still sign up for net metering if you go solar. You'll get that full retail rate, but you'll also have to pay a Customer Benefit Contribution Charge, or CBC, which depends on the size of your system and your utility company. The 2024 residential CBC rate in ConEd territory is $1.41 per kW-mo. You’ll be charged a $14.10 monthly fee on your utility bill.

The alternative is to opt for the new VDER program. This will usually mean a lower compensation rate for your solar power, but the CBC charges will be lower too.

So, it's a trade-off. You have to decide if you want the higher pay rate with net metering or the lower fees with VDER. Your best bet is to talk to your utility provider to see which option works best for your situation. Either way, going solar in New York is still a solid way to save money and do your part for the environment.

» GREENEST STATES: New York ranks No. 8 in 2024

How much are solar panels in New York?

Before considering the federal solar tax credit, solar panel costs in New York typically range from $10,360 to $29,600. On the higher end, Sasha in the Bronx, New York, told us they invested $50,000 going solar.

Average solar panel installation cost by system size in New York

Solar resources in New York

Below are some additional resources to help New York homeowners invest in solar and other energy-saving upgrades.

• New York State Solar Guidebook
• New York Green Bank
• New York State Energy and Research Authority
• EmPower+
• Comfort Home Program
• NY-Sun
• NYS Clean Heat
• PSE&G Home Performance Program
• Home Comfort – PSEG Long Island

Find solar companies in New York

A good solar company helps you navigate local incentives, permitting and net metering policies. Compare our choices for the top solar companies in New York to learn more.

Bottom line

Buying solar panels is a big upfront investment, but federal and state incentives plus New York’s generally solar-friendly policies help make it more affordable. ConsumerAffairs Research Team conducted an in-depth analysis to determine the average costs of going solar. Turns out, it’s worth it for many homeowners, particularly in New York.

Solar costs vs. savings: New York and nearby states