New York solar tax credits and incentives - the complete guide (2020 edition)
New York state has some of the best solar incentives in the country. All together, you can save more than 50% off the cost of home solar.
New York state, despite being situated in the northeastern United States instead of the Sunbelt that people normally think of when it comes to solar, was the 6th largest state for solar photovoltaic installations in 2018.
This is helped in a large part by some of very best solar incentives in the country.
Summary of solar rebates available to New York residents:
|Federal tax credit||26% off system price through 2020 (22% in 2021)|
|New York income tax credit for solar||25% off system price, up to $5,000|
|NYSERDA NY-Sun rebate||Rebate of $0.20 to $0.35 per watt, depending on your region.|
In New York state, you’ll qualify for tax credits from both the federal government and New York state. Combined, these are worth 51% off the cost of a home solar system. On top of that, many residents will also have significant rebates from the New York State Energy Research and Development Authority (NYSERDA) that can knock approximately another 10% off the cost of the system.
Massive savings like this are one of the reasons that so many people in New York state have chosen to go solar. And if these rebates weren’t enough, there are other important pro-solar policies, such as sales and property tax exemptions. Read on to learn about each of these programs.
New York income tax credit for solar
The New York Department of Taxation and Finance offers the Solar Energy System Equipment Credit, which is an income tax credit equal to 25% of the system costs, up to a maximum of $5,000.
“System costs” means the gross cost of installation, which includes equipment and labor.
This is not an upfront rebate, but a tax credit used to lower your tax bill, just like the federal tax credit for solar. Because of this, you will need to be able to cover the cost of the system until tax filing time, at which time you can claim your credit.
Fortunately, it’s simple to claim this tax credit: it’s only a one-page form. There are a few eligibility requirements to be aware of, however. Here are the key details:
- The equipment must use solar energy for heating, cooling, hot water, or electricity. This means that photovoltaic solar panels qualify, but so does solar hot water equipment.
- Only equipment installed at your principal residence qualifies. This is defined as the home where you live most of the year, regardless of whether it’s a single family home, mobile home, or condo. Vacation homes do not qualify.
- Purchases, power purchase agreements, and leases all qualify. This is unusual, because other solar incentives do not allow the homeowner to claim costs related to a lease or PPAs. The New York tax credit does. If you purchased your system, the credit is calculated against your full cost of the system. If you used a PPA or lease, the credit is calculated against your monthly payments. While this is substantially less than if you had bought the system, it’s certainly better than nothing.
- The credit is calculated against the full purchase costs. This includes the full invoice cost from your solar installer, including equipment, labor, and system design.
Because this is such a big tax credit, it’s possible that the credit will be more than the state income tax you owe. If that’s the case, don’t worry. You can carry over any unused credits for up to five years, giving you plenty of time to take full advantage of this incentive.
To learn more and to apply for the rebate, use Form IT-255. See the link below and the accompanying instructions.
NYSERDA NY-Sun rebate
New York State Energy Research and Development Authority (NYSERDA) is a public-benefit corporation that promotes energy efficiency and the development of clean energy in New York.
Within NYSERDA is a program called NY-Sun, which provides a number of resources to help New Yorkers go solar, including financial incentives. For residential solar, the Megawatt Block (MW Block) incentive offers a substantial rebate. It’s called a block program because the incentive is offered in tiers that step down in value as more solar is deployed across the state.
The incentive varies across the state, and is divided into three regions, each with different incentive blocks. On Long Island, the block program was filled in 2016 and no more incentives are currently being offered. The other two regions are Con Edison and Upstate, both of which are open and have incentives of $0.20 per watt and $0.35 per watt respectively.
To qualify for this incentive, projects must use an eligible contractor. If you use our service to get solar quotes, we’ll make sure to recommend a qualified installer near you.
How to qualify
If your project is eligible, your contractor will apply for the incentive, and it is immediately used to reduce the cost of your system. In other words, it comes right off your invoice - you don’t have to wait for tax time, as is the case with other rebates.
This incentive is currently open in two regions: Upstate and the Con Edison service area. Use the links below to check the current funding level:
Con Edison NY-Sun Incentive
|Applies to counties:||Bronx County, Kings County, New York County, Queens County, Richmond County, Westchester County|
|Current incentive level:||$0.20 per Watt|
|Remaining budget:||See the project dashboard for the remaining funding|
Upstate New York NY-Sun Incentive
|Applies to counties:||All counties outside of Long Island and the Con Edison territory|
|Current incentive level:||$0.35 per Watt|
|Remaining budget:||See the project dashboard for the remaining funding|
NY-Sun MW Block dashboard
Is net metering available in New York?
Yes, although the policy is currently being updated. New York has had traditional net metering since 1997. As part of New York’s Reforming the Energy Vision (REV) plan, this traditional net metering policy is being transitioned to a new plan called Value of Distributed Energy Resources (VDER).
Under VDER, you will be compensated for excess solar energy that you send into the grid. The exact amount of that compensation is a complicated formula that includes the environmental value of your solar electricity, the relief that it provides to your specific location in electric grid, and more.
It’s location-specific because during some times of day and in some locations in the state, the electrical grid is under more stress. VDER is an attempt to be a smarter financial incentive by encouraging the development of electric generating assets that provide the most value to the grid.
The geographic component of VDER is called Locational System Relief Value (LSRV), and the LSRV zone maps can be as specific as the substation that services you. For example, if your substation is near its capacity, any solar electricity that you send into the grid will provide relief to that substation, and you will receive a higher compensation than if your substation isn’t heavily stressed.
Because of this, some customers may receive a lower compensation under VDER compared to net metering, while others will receive more. It’s a complicated formula. NYSERDA provides a calculator in Microsoft Excel format that can be used to estimate the lifetime value of a proposed solar project, but be warned - it’s not the most user-friendly tool.
In the meantime, VDER is still under development and the Public Service Commission is seeking stakeholder input. Until then, customers will have the option of choosing net metering until January 1, 2020, and new net metering customers will be grandfathered in for 20 years. Already existing customers will continue to have net metering for the lifetime of their system.
To learn more, use the link below.
Is there a net metering cap in New York?
Yes. The cap is set such that net metering projects do not impact more than 2% of each utility’s incremental net annual revenue.
The New York Public Service Commission (PSC) has asked that utilities report when they hit 85% of the recommended capacity size allocations for each of the utilities. This will give the PSC time to decide what the next steps should be.
As of 2020, none of the utilities in New York have hit the cap limit.
NY Sales tax exemption
Some counties in New York provide a sales tax exemption on the sale of solar energy systems. For those in the included counties, that amounts to a 4% reduction in the cost of your system.
For a list of sales tax exemptions by county, check out the link below.
NY Property tax exemption
New York offers a property tax exemption for renewable energy equipment added to your home, including solar and geothermal. This exemption means that your property tax assessment will not increase because of the value thatsolar panels add to your home.
The relevant form is RP-487 and is listed below. According to the instructions, the duration and value of the exemption is:
The exemption is equal to the increase in assessed value of the property attributable to the inclusion of the energy system and is to be granted for a period of 15 years.
To apply for the exemption, fill out the form and file it with the Department of Taxation and Finance. You should do this as soon as possible after your system is installed so that you can avoid any increase in your property tax assessment. The filing date varies by county. The form below lists the dates for your county. Thankfully, the form is quite brief.
Does New York have a solar access law that addresses homeowners associations?
No. There are no state-level laws that address the right of a homeowner to install a solar energy system on their property. However, some municipalities may have zoning rules that specifically address solar access, so check with your local government.
Without a solar access law in place, an HOA is permitted to create bylaws that restrict the size, placement, or ability of a homeowner to install panels on their home. Therefore, if you live under an HOA in New York state, be sure to contact your HOA before planning any solar installation work.
Is virtual net metering (community solar) available in New York?
Yes. Residential consumers, such as renters, who don’t have the ability to install solar panels on their home should check out the list of community solar projects at the link below.
Map of community solar projects in New York
How much does electricity cost in New York?
The average price of residential electricity in New York state, over the past ten years, is 18.34 cents per Kilowatt hour. This is 52% more than than the US average price of 12.07 cents per kWh.
Why is this important to know? Depending on the size of your systems, owning home solar reduces or eliminates the effect of electricity price increases.