The complete list of NY state’s solar incentives and tax credits for 2023, plus how to take advantage.
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New York is enjoying a boom in solar. The state’s signature initiative, the NY-Sun program, has already helped install solar on more than 165,000 rooftops or properties since 2011. NY-Sun isn’t resting on its laurels though. The plan is to install more than 6 gigawatts of distributed solar by 2025.
It’s a great time to go solar in New York State, then. Homeowners can take advantage of a 25% tax credit, an exemption from state sales tax, state solar rebates, and more solar incentives!
New York State Solar Incentives
|State solar tax credit||25% residential tax credit, up to $5,000|
|State solar rebates||Incentive rates vary depending on location and uptake – can be as high as $0.50/W|
|Low-cost state solar loans||Tax deferral/bridge loans and low-cost subsidized solar loans available to NY state residents|
|State sales tax exemption||Save the 4% state sales tax on solar installations|
|County and municipal property tax exemptions||NY State allows local governments to grant property tax exemptions for solar|
|Net metering||Utilities must offer net metering or a version thereof|
New York State solar tax credit
New York offers a state solar tax credit for solar water heat, solar space heat, and solar photovoltaics. The residential tax credit is 25%, up to a maximum of $5,000.
Unlike most solar tax credits, homeowners in New York State who install a solar energy system under lease or power purchase agreements (PPAs) of at least 10 years in length can also claim the tax credit. To apply, you’ll need to fill out Form IT-255 (Claim for Solar Energy System Equipment), having read these instructions.
New York State solar rebates
New York State offers upfront rebates for residential solar energy systems through its Megawatt Block Incentive. The scheme is managed by NY-Sun, which allocates incentives based on megawatts to each of three regions. Each region is broken into blocks, with current statuses viewable at the three dashboards: Upstate (at a rate of $0.50/W), Con Edison ($0.20/W), and Long Island (currently fully subscribed).
The solar incentives in New York are being phased out as more solar is installed in each block and region. This allows NY-Sun to offer targeted support to foster a sustainable solar market in regions that are a little slower to adopt solar.
The NY-Sun program includes an Inclusive Community Solar Adder (ICSA). This is designed to offer higher rebates for solar projects serving low-to-moderate income (LMI) subscribers, affordable housing, and other facilities serving disadvantaged communities (DACs). However, this program is under revision as of July 2022 and is set to reopen later in 2022.
NY-Sun offers additional incentives to some homeowners through Affordable Solar, which increases the amount received for households earning less than 80% of the median income in the area. Affordable Solar requires applications to carry out minor low-cost energy efficiency home upgrades and a complete Incentive Eligibility Application.
See also: The cost of solar in NY state
Low-cost state solar loans in New York
New York state residents may be able to access a Renewable Energy Tax Credit Bridge Loan. This short-term loan is intended to help homeowners cover the upfront cost of going solar in advance of reimbursement from federal and state tax credits for eligible renewable energy system products.
NY-Sun also offers low-cost financing options to residents facing barriers to accessing traditional financing. These include On-Bill Recovery, Smart Energy, and Companion loans for renewable and energy efficiency projects. Loans range from $1,500 to $25,000 with loan terms of five, 10, or 15 years. For more information on these options, see the New York Homeowner’s Guide to Solar Financing: Loans, Leases, and PPAs.
State sales tax exemptions in New York
New York has exempted residential solar-energy systems from the state’s sales and compensating use taxes since 2005. It extended the exemption in 2012 and 2015 to include, respectively, commercial solar energy systems and solar systems owned by third party owners who provide solar electricity to residential and commercial users. Solar lease payments and the sale of electricity by such systems are also exempt from the state’s sales and use tax.
With New York State’s sales tax set at 4%, this exemption offers excellent upfront savings. Local exemptions may also exist, so check with your county or municipality to see if your solar energy system is eligible for an exemption from any additional sales taxes.
State property tax exemptions in New York
New York State doesn’t have a statewide property tax exemption but does allow local governments to offer such. This can be up to a 15-year real property tax exemption for solar, wind energy, and farm-waste energy systems constructed in New York State.
As currently effective, the law is a local option exemption, meaning that local governments are permitted decide whether or not to allow it. The exemption was mandatory prior to a 1990 reenactment in which the local option clause was added. The exemption is valid unless a government opts out of the exemption, as opposed to the more common practice of requiring governments to “opt-in” in order to offer an exemption.
Net metering in New York
Net metering is mandated by law in New York State. Prior to 2022, the state used a fairly standard net metering system requiring utilities to compensate customers at retail rate for excess energy. Now, homeowners with residential solar installations can choose between net metering, and the Value of Distributed Energy Resources (VDER) or the Value Stack.
If you choose the more lucrative net metering option, you have to pay a Customer Benefits Charge (net metering customers didn’t have to pay this previously). VDER was established by the New York State Public Service Commission (PSC) as a lesser version of net metering. Under VDER, customers don’t get full retail rate but are compensated at a lower price for surplus energy based on factors like where and when the energy was produced.
Final thoughts on state solar incentives in New York
New York State gets a little less sun than average in the U.S. but has a fairly high cost of electricity. Going solar could save the average household nearly $66,000 in electricity costs over a 25-year solar panel lifespan. With the average cost of rooftop solar in New York State somewhere between $10,000 and $25,000, it makes a lot of sense to go solar at home in New York State.
Factor in a generous rafter of rebates, tax credits, exemptions, and even the somewhat subpar net metering regulations and you can get that cost down to under $15,000 and maybe even under $10,000. All in all, homeowners in New York State are well placed for a short solar payback period in the Empire State.