New York Solar Incentives and Rebates Guide
Key Takeaways
- New York is a large, diverse, populous state that offers various solar incentives for city, suburban, and country residents.
- The federal solar tax credit offers residents of New York a 30% tax credit on new solar systems through the year 2032.
- The NY-Sun PV Incentive Program has a tremendous budget to provide rebates to New Yorkers.
- Net metering is an option for New York residents, enabling them to earn credit for the excess solar power their systems produce.
Switching to solar can save you money in the long run, but it often takes time to see a return on your investment, and the upfront costs can be high.
The state of New York recognizes that local, state, and federal incentives are vital to keeping New Yorkers motivated to switch to distributed energy resources like solar panels, which is a more sustainable energy option.
The state’s diversity calls for a wide range of solar incentives that can lower costs for city, suburban, and country residents in New York.
We’ll explore the best solar incentives in New York and show how switching to a solar panel system is not only cost-efficient over time but also more affordable than you may think.
In addition to its wide range of locations and lifestyles, New York has large income gaps that call for programs to help lower-income families. Although New York is known for its cold winters, its hot summer months offer plenty of opportunities to make use of solar energy and help save New Yorkers money on their electric bills.
Let’s see what New York solar incentives and other options are available to help New Yorkers achieve major solar savings.
New York Solar Incentives
Solar Sales Tax Exemption
Residential, commercial, and industrial properties across New York State can take advantage of the statewide solar sales tax exemption when they install a solar panel system.
As listed in the Database of State Incentives for Renewable and Efficiency (DSIRE), the New York State Department of Taxation and Finance offers 100% exemption from state sales tax for solar technologies, which also include solar water heat, solar space heat, and solar pool heating.
This means residents won’t have to pay the 4% New York state sales tax.
New York City and other local jurisdictions also grant exemption from the local sales tax and use tax for residential solar panel systems.
Property Tax Exemption
Another state-level incentive is a residential property tax exemption, and it includes low-income properties.
The New York State Department of Taxation and Finance allows eligible solar system owners to receive a 100% property tax exemption for 15 years for solar, wind energy, and farm-waste energy systems with a maximum size of 1,000 kilowatts. This program is set to expire on January 1, 2025.
Owners of residential systems can get a property tax exemption for the value of their system for 15 years. This allows homeowners to boost their property value without increasing their taxes.
NY-Sun Solar Program
The New York State Energy Research and Development Authority administers this program, sometimes called the NY-Sun initiative, to help make solar electricity more accessible for all New Yorkers, including families, businesses, commercial and industrial projects, and local governments. It offers solar incentives and financing like loans, including for community solar projects.
The NY-Sun initiative has over a $3 billion budget through 2030.
For homeowners to qualify and take full advantage of the rebate, NY-Sun initiative applicants must ensure that their solar system is put in place by a pre-approved solar installer and is up to state, federal, and local codes.
A New York State Research and Development Authority (NYSERDA)-approved contractor that participates in the program will help homeowners find out what incentives they are eligible to receive.
Understanding the Megawatt Block Incentive
NY-Sun adheres to a megawatt block incentive structure to support solar markets in the parts of New York where it is most needed. Here is what that means.
The program has split New York into three regions (the one served by the utility Con Edison, which is considered downstate; the area served by PSEG Long Island; and the rest of New York State).
Each region has been broken into blocks that get a certain number of megawatts eligible for NY-Sun incentives.
This solar incentive varies depending on the region, and the rates decrease as megawatt goals are met. In fact, the Long Island region has been fully subscribed, so NY
Sun incentives are no longer available there.
In the other two regions, residential rates are $0.20 per watt; commercial rates vary. But it’s worth it because this incentive provides homeowners an average savings of
$2,000. DSIRE explains more about the rates and financial caps.
The megawatt block incentive will end once the remaining two regions are fully subscribed, so it is best to take advantage of this particular New York Solar incentive now.
PACE Financing
Property-assessed clean energy (PACE) financing allows applicants to take out loans for clean energy improvement projects.
The intended recipients of this incentive are commercial; however, multifamily residential buildings are also eligible.
This loan helps by allowing property owners to take out money without having to pay a large investment upfront on solar panels.
The terms of this loan are determined locally. According to DSIRE, energy audits are required in order to be eligible.
Solar Energy System Equipment Tax Credit
New York State offers residents who want to invest in distributed energy resources—namely, a solar panel system—a Solar Energy System Equipment Credit.
New York residents are eligible for this tax credit if they purchase or lease solar energy system equipment, or sign up to buy solar power generated by a photovoltaic system owned by another party, like a community solar project.
This tax credit is equal to 25 percent of home solar system costs, up to $5,000.
NY Green Bank
The NY Green Bank is less an incentive and more a business opportunity, at least in the beginning.
The state has set up an investment fund to help prospective New York solar customers break through financial barriers to investing in clean energy.NY Green Bank partners with other banks to provide financial resources so that otherwise unattainable economic programs will be achievable.
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Local Incentives
Green Building Financial Incentive
There are lots of local-level incentives. For example, the town of Riverhead, Long Island, includes a Green Building financial incentive for solar panels in the commercial and residential sectors.
The law was initially passed in 2005 and requires a permit fee of $50 to $150. This is in contrast to the $1,000 that was the normal permit fee for anyone who wanted to install solar panels on their buildings.
Solar Electric Generating Systems Tax Abatement Program
This solar property tax incentive program is designed for residential and commercial building owners in New York City. It encourages them to establish solar electric generating systems in their buildings.
The systems must not “include any equipment connected to a solar electric generating system that is a component of a non-solar electric generating system or that uses any sort of recreational facility or equipment as storage.”
The program provides a four-year tax abatement of 5% of eligible expenditures, with a maximum tax abatement of $62,500 each year.
Federal Incentives
Federal Solar Tax Credit
The U.S. government offers all states a federal tax credit for solar installations. The Inflation Reduction Act of 2022 modifies and extends the federal solar tax credit, also called the investment tax credit (ITC), which offers a 30% tax credit on systems installed from 2022 through the end of 2032.
The amount of federal tax credit decreases in subsequent years.
For example, if you install your system after 2032, you will be eligible for a 26% tax credit. For installations in 2034, owners of solar panels will be eligible for a 22% tax credit.
This program does not have a cap, which means that even a large solar installation can take advantage of and see valuable savings.
The federal investment tax credit reduces federal income tax payments for everyone, from businesses and local nonprofit organizations to homeowners who purchase solar energy systems.
Qualified low-income individuals with residential solar energy equipment projects can obtain further tax credits. Rates vary depending on the timing of construction, the solar project’s status, and labor details.
Federal Solar Investment Tax Credit
| Through 2032 | 30% |
|---|---|
| 2033 | 26% |
| 2034 | 22% |
Net Metering in New York
Net metering involves using excess solar energy to your credit: for both your energy account and for your actual energy production.
During the brighter, sunshine-filled hours, your solar system may generate more energy than you actually need. Electric companies would not charge you during this time, since you are providing your own source of energy.
At night, when you can no longer generate power from the sun, you would be charged at your regular rate of electric usage.
The benefit comes from receiving a credit in exchange for the excess energy produced during the day.
Long Island has its own net metering process through its utility PSE&G. Although not governed by the state of New York, Long Island’s net metering processes are very similar to the rest of the state’s.
Net metering is not just limited to homeowners looking to save on their energy bills. Commercial, industrial, nonprofit, residential, schools, agricultural, and institutional sectors across New York can also enroll in net metering through their participating electricity company.
The Solar Payback Period
With all the promise of savings from solar, commercial and residential users may wonder how long it will take to see a return on their investment in their solar system.
The amount of time it takes for savings to be generated by the investment to match its cost is considered a payback period.
Payback periods ultimately depend on the number of solar panels, system installation costs, and local electricity rates.
| Typical 6kW solar system installation cost | $17,700 |
|---|---|
| 30% Federal Tax Credit | $5,310 |
| Total Cost After Incentives Total Cost After Incentives Not including local incentives, which vary | $12,390 |
| Assumed Electricity Produced by a 6kW Solar System in Illinois | 8,467 kWh |
| Annual Electricity Cost Reduced or Offset Assuming 100% utilization by the home | $1,945 |
| Sample Payback Period | 6 years |
Sources: https://www.nrel.gov/docs/fy22osti/83586.pdf, https://globalsolaratlas.info/map (New York); https://www.eia.gov/electricity/monthly/epm_table_grapher.php
Conclusion
Whether you are looking to transition a commercial building in Manhattan to solar electricity or save money on electricity costs by installing solar panels on your home in Buffalo, the state of New York and the federal government have solar incentives to help you achieve energy savings now and in the long term.
You can buy or lease solar energy system equipment and even get a solar loan to help you finance your solar panels in New York.
New York solar owners will see more than just environmental value when they install solar systems. Make sure you consult with a tax professional to ensure you’re reaping all the benefits, like state solar tax credits and reducing your property taxes.
FAQs
Can you get solar panels for free in New York?
While New York does not offer free solar panels, going solar in New York is doable. New York provides plenty of financing options that make an otherwise unobtainable cost of solar accessible, even for those who are looking for low-income-related residential solar incentives.
Is making the switch to solar in New York State financially worth it?
New York State can help you save money thanks to rebates, tax credits, and programs like net metering. These incentives significantly lower your upfront costs and your electric bills, which makes the switch financially worth it. (The environmental benefits that solar panels add are great, too.)
Does New York have a state solar tax credit?
New York State has a solar energy system equipment credit that offers 25% (up to $5,000) of all eligible solar system equipment expenses, including solar panels.