New York Solar Incentives (Rebates, Tax Credits & More in 2023)

In the table below, we’ll provide a quick look at all of the available incentives in NY, followed by a more in-depth explanation of each.

What Do New Yorkers Need to Know About the Federal Solar Tax Credit?

The federal solar investment tax credit — commonly referred to as the ITC — is a tax credit offered by the federal government to incentivize solar adoption across the country. It’s available to all New York property owners and provides a credit for 30% of your system price, including panels, batteries, electric vehicle (EV) chargers, inverters and installation labor.

Since the average system in NY totals around $19,175 in most cases, the 30% credit will come out to about $5,753 for most New Yorkers. That amount gets applied to the income taxes you owe. It’s important to note that you won’t be able to take this credit if you don’t owe money on your taxes.

The federal credit was initially offered in 2005 at 30% and was set to decrease to 26% in 2022 and 22% in 2023. By 2024, the program was originally supposed to disappear.

Thanks to the Inflation Reduction Act (IRA) signed in 2022, the credit was bumped back up to 30% and extended to 2035. The new credit rate schedule is as follows:

• 30% credit for all systems installed between 2022 and 2032 (retroactively includes systems installed in 2022 before the IRA was signed)
• 26% credit for all systems installed in 2033
• 22% credit for all systems installed in 2034
• 0% credit for systems installed in 2035 and beyond

How to Claim the Federal ITC in New York

Claiming the federal credit for PV systems in NY is a simple process that just involves filling out an additional form when you file your taxes. You can follow the steps below to ensure you take advantage of this solar benefit program.

• Step 1: When you’re ready to file your taxes for the year you installed your panels, go to the IRS website and print out form 5695.

• Step 2: Fill out the form, which requires information about where the system is installed, the size and expected output of the system, the price you paid for your PV equipment, contact information for the installation company you used and more.

• Step 3: File the completed form alongside your taxes, or have your accountant do so.

If you use software like TurboTax to file your taxes, you can simply follow the prompts regarding solar energy equipment and energy efficiency upgrades rather than following the steps above. The software will ask for the required information automatically.

EcoWatch’s Opinion on the Federal Solar Credit in New York

New York has some outstanding state incentives, but we still think the federal credit is the best perk available in the Empire State. Not only does it require minimal effort on your part to take, but it also provides an average potential savings of just over $5,750.

In our opinion, no other perk in NY provides the same bang for your buck. In fact, if you only file for one incentive, we’d strongly recommend you make it this one.

It’s crucial to keep in mind that this isn’t a rebate, and the credit may not be fully available to every solar customer. You’ll only see a benefit from this perk if you owe money on your income taxes when you file. You’ll only see the maximum benefit if you owe at least $1,150 per year for the first five years following installation.
Watch Below: How Can New Yorkers Save Money When Going Solar?

What You Should Know About the New York Solar Energy System Equipment Credit

New York is one of the few states that offer a statewide tax credit in addition to the federal one, and it comes in the form of the NY Solar Energy Equipment Credit. The credit value is for up to 25% of your entire system total or $5,000, whichever is lower.

Given the average system price of $19,175 in New York, most solar customers will get a credit value of $4,793, which is 25% of the average system price and just under the maximum possible credit amount.

This credit works just like the federal credit: the 25% (or $5,000) gets credited to your income tax bill and reduces the amount you owe on your taxes. If you can’t take the entire credit the first year your system is commissioned, you can roll over any unused credit for up to five years.

The only difference between this credit and the federal solar tax credit is that the New York solar tax credit applies to solar leases and PPAs as well as purchased systems.

How to Claim the State Solar Tax Credit in NY

Claiming the state credit is just as straightforward as claiming the federal one. You can follow the steps below to make sure you take advantage of this perk as a NY solar customer:

• Step 1: When you’re ready to file your taxes for the year you installed your PV equipment, print out New York tax form IT-255.

• Step 2: Fill out the form with information about your system size and costs, your installer and the address where your panels were installed.

• Step 3: File the form with your taxes.

If you’re using TurboTax or HR Block, make sure the program prompts you to provide information for the state rebate. If not, you may need to print the form and include it with the digital filing.

EcoWatch’s Opinion on New York’s Solar Energy System Equipment Credit

Aside from the federal tax credit, we believe this state credit is one of the best incentives available to solar customers in NY (or any state for that matter). It provides massive value — just under $5,000 in most cases — and involves a single-page document to be filled out, which should take fewer than five minutes.

The state credit is also outstanding because, unlike the federal credit, it can be applied to leases and power purchase agreements (PPAs).

There are two important things to remember about this credit. First, it’s a tax credit and not a rebate, so you won’t be able to take full advantage if you don’t owe an average of around $1,000 on your income taxes each year for the next five years.

Second, the 25% credit amount is determined after the NY-Sun rebate, which we’ll discuss next.

What You Should Know About the NY-Sun Megawatt Block Incentive

In addition to the statewide tax credit, New York also offers a solar rebate called the NY-Sun Block Incentive or the NY-Sun Initiative. This provides a cashback incentive of between $0.15 and $0.30 per watt installed for qualifying customers. The rates are detailed below based on your location in the state to help you estimate what your rebate amount will be:

• Long Island/PSEG Customers: blocks have been filled, so the rebate is no longer available

• Con Edison Customers: $0.20 per watt installed

• Upstate New York: $0.30 per watt installed

The actual rebate amount will vary based on your location, your income qualifications and your system size, but most rebates will hover between $1,950 and $3,000.

How to Claim New York’s NY-Sun Megawatt Block Incentive

Claiming this perk is done through your NY solar contractor. Your installation company should provide the required documentation to you and file it on your behalf. Asking an installer prior to signing anything if it will handle the application for you is a good way to qualify a solar provider in NY.

If you’re not sure which installers are reputable and can help you file for this perk, you can check out our guide to choosing a reliable solar installer in NY or head over to the New York State Energy Research and Development Authority website.

EcoWatch’s Opinion on New York’s NY-Sun Block Incentive

Solar rebates are always great to have, as they effectively help bring down the upfront cost of your PV system.

This perk, in particular, is outstanding for two reasons. First, it provides a massive value of between $1,950 and $3,000. Second, you don’t have to fill out or file any paperwork. Your installation company will do the work for you, which means you get a huge upside with minimal time and effort spent on your part.

What You Should Know About the New York Solar Sales Tax Exemption

The exemption for sales tax provided by certain counties within the State of New York waives all sales tax on PV equipment, including panels, batteries, inverters and more. This perk helps keep the cost of converting to solar more affordable and reduces the barrier to entry into clean energy.

Given the average system total of $19,175 in NY and the state sales and use tax of 4%, this perk alone should save an average of just over $700.¹ Visit this page to see if the tax is waived in your county.

How to Claim the New York Solar Sales Tax Exemption

One of the best parts about the exemption for sales tax in NY is that it’s automatic. You don’t need to file any paperwork; sales tax will simply not be included in your solar estimate or your final system price.

EcoWatch’s Opinion on the Exemption for Sales Tax in New York

Exemptions for sales tax are a great way for states to make solar more affordable, so we love this perk in NY. It saves the average solar customer around $1,700 and requires no time or energy to apply for, so it’s an outstanding perk all around. We only wish it was offered by every county.

What You Should Know About New York’s NYSERDA Residential Financing Options

In addition to managing the block program, NYSERDA also offers a solar financing program to help make solar adoption more accessible.

The program provides loans for between $1,500 and $25,000 for home energy efficiency improvements, and it keeps down payment requirements and interest rates low to minimize financing costs.

The actual amount you stand to save by choosing these loans depends on your interest rate, whether or not these loan options are the only way you can convert to solar and more.

How to Claim Residential Financing Options in NY

Applying to these financing programs is a quick and simple process. You can follow the steps below to enroll.

• Step 1: Go to NYSERDA’s website for the residential financing programs.

• Step 2: Click on the program that applies to your situation. In most cases, you’ll use this option for solar electric systems, but some customers might need a bridge loan or companion loan, depending on what they plan to finance and when.

• Step 3: Apply to the loan program and wait for a program administrator to approve you and walk you through the next steps.

EcoWatch’s Opinion on New York’s Residential Financing Options

These loan programs are a great option for aspiring solar customers who may not be able to afford or qualify for other loan programs. While a cash purchase is the most beneficial in the long run, we think this is a great option for those who can’t swing an upfront purchase of their equipment.

What You Should Know About the Energy Conservation Improvements Property Tax Exemption in New York

This benefit program prevents your solar panel system from affecting your taxes. Normally, any home improvement that makes your home more valuable would also increase your taxes. Converting to solar is expected to boost your property value, but this policy keeps your taxes from changing for 15 years following the installation.

The exact amount you’ll save with this program can vary based on your system value. The average estimated saving is around $310 per year. This is based on the typical system price of $19,175 and the statewide tax rate for properties of 1.62%.² That $310 per year for 15 years comes out to an average savings of around $4,650.

How to Claim the Property Tax Exemption in New York

Much like the exemption for sales tax, taking advantage of the exemption for property taxes doesn’t require any time or effort on your part. The tax assessor in your area simply won’t include the value of your solar system when determining your tax-assessed value.

EcoWatch’s Opinion on New York’s Property Tax Exemption for PV Equipment

We love to see perks like this tax exemption, especially in areas like NY, where the tax rate is above the national average.³ Incentives like this are an outstanding way to keep conversion costs down, push the local solar industry forward and move toward 100% clean energy while keeping installation costs as low as possible.

Best of all, this exemption doesn’t require any work on your part, so it’s an easy way to save when going solar.

Net Energy Metering in New York

Net energy metering is one of the most popular and widely available incentives in the country. It’s a billing policy that provides credits to customers for excess energy production that’s sent to the electric grid via local utility companies. The credits you earn for power sent to the grid will effectively lower your utility bills in future months when production dips below consumption.

New York’s net energy metering program is available for residential systems up to 25 kW. With an average system size of 6.5 kW, this perk applies to virtually all solar customers in the state.

Most importantly, the value of energy credits earned is equal to the retail rate per kilowatt-hour (kWh). That means every kWh you generate can pay down one kWh in the future. Unused credits roll over for 20 years.

Like many other states, NY is moving away from net energy metering. The Public Service Commission (PSC) is implementing a Value of Distributed Energy Resources (VDER) program to replace net energy metering (NEM). This new program is also called a Value Stack.

It works similarly to NEM, but the rate is different and usually comes out to below the retail rate. The specific rate you pay varies based on how your system influences strain on the grid, how large your system is, your utility company and more.

Currently, New York solar customers can choose between NEM and VDER. Those who choose VDER will pay half of the Customer Benefit Contribution (CBC) charge, which is the price you’ll pay for access to net energy metering.

In effect, both options will save you money on your energy bills. NEM will likely save more for most residential solar customers, but that policy will no longer be available in the coming years as VDER takes effect.

How to Enroll in Net Metering in New York

Enrolling in NEM or the VDER program is done through your solar contractor, so the process is straightforward. You can follow the steps below to make sure you take advantage of one of these perks.

• Step 1: First, contact your utility provider to ensure you have a bidirectional meter installed on your home. This is a necessary piece of equipment to have for interconnection before you can choose net energy metering or VDER.

• Step 2: Choose a solar contractor and move forward with the installation.

• Step 3: Your contractor should ask you which program you’d prefer to be a part of. Reputable installers will advise one way or the other based on your system and the impact it will have on the grid and the environment.

• Step 4: Your installation company should enroll you in the program of your choosing, so you don’t need to fill out any paperwork.

• Step 5: We recommend monitoring your electric bills for a few months to ensure your credits are accruing as expected.

EcoWatch’s Opinion on Net Energy Metering in New York

NEM is an outstanding solar incentive that helps solar customers maximize their long-term energy savings and pay off their systems more quickly. Since this policy helps most customers achieve an average lifetime savings of around $24,387 in NY, it’s one of the most crucial perks to take advantage of.

Additionally, we love the VDER program that’s replacing NEM in NY. This new policy is slightly less beneficial to solar customers, but it reduces strain on the power grid and has a more positive effect on the environment as a whole.

These policies are especially great because they don’t require any work on your part to enroll in most cases.

Local Solar Incentives in New York

In addition to the multitude of statewide solar perks, there are a number of local incentives available throughout New York as well. These are provided by local utility companies or municipalities to provide additional savings on PV equipment for solar customers.

We’ll include a complete list of local incentives in NY below, along with a brief description of each perk.

• City of Riverhead Energy Conservation Device Permitting Fees: This perk is offered in the City of Riverhead and reduces the cost of permits for solar PV systems.³ This saves hundreds of dollars for most solar customers.

• New York City (NYC) Property Tax Abatement for PV and Energy Storage Equipment: This is a tax deduction for PV equipment for taxes related to property ownership. It works similarly to the credits for income taxes, but the credit is applied to the taxes on your property instead.⁴ This is available in a variety of different amounts based on your system size and property location, but it very often saves hundreds or even thousands of dollars on taxes.

• NYC Residential Solar Exemption for Sales Tax: The exemption for sales tax mentioned earlier is for state taxes only. This exemption also waives local sales tax on PV equipment for New York City homeowners.⁵

Which Tax Incentives Are The Best In New York?

New York has quite a few solar incentives available, which we’ve discussed above. However, not all of the perks are as beneficial as the others, so some customers looking to save time and apply only for the most impactful incentives will have some decisions to make.

To help decide which are the most beneficial perks, we’ll rank what are, in our opinion, the top four incentives in New York below. These are the perks that we strongly recommend you don’t miss out on.

The Federal Solar Tax Credit

The federal credit provides the largest credit available in the state, averaging around $5,753. Given the cost to go solar in NY — an average of around $19,175 before any perks — this single incentive can effectively bring your system total down by more than 30%. Plus, the application process is quick and painless, taking no more than a few minutes.

If you only have time to file for one incentive, we recommend you make it this one.

The New York Solar System Equipment Credit

The next most beneficial incentive in New York, in our opinion, is the New York State tax credit. This credit provides a credit in the amount of 25% of your system costs, or $5,000, whichever is lower. Most New York residents will get close to the $5,000 credit, provided they owe income taxes that total that amount over five years from the installation date.

In our opinion, this perk is a no-brainer, as it provides massive value for just a few minutes worth of paperwork.

The NY-Sun Block Incentive

The NY-Sun incentive is another outstanding perk that provides an upfront rebate for your PV system. Credits to taxes and other perks may provide more value over time, but the immediacy of this benefit makes it one of the best, in our opinion.

This incentive takes a bit more time to apply for, but the value you get is still well worth the investment of time and energy.

Net Energy Metering/VDER

Finally, we suggest you take advantage of net energy metering or the new VDER program in NY. Both of these solar programs are filed for through your utility provider, so the process couldn’t be easier. Plus, they will help you reduce your payback period — meaning they will pay off your system more quickly — and maximize your energy savings in the long run.

What’s The Near-Term Outlook For More Incentives In New York?

As of right now, there are no hard dates when solar incentives will change in NY. However, both the net metering policy and the NY-Sun Block Incentive program are subject to change in the near future.

New York is moving away from net energy metering and is instead implementing a slightly less appealing VDER program for crediting overproduction. In the next few years, NEM will be phased out, and the VDER program — which can now be elected — will be the only credit option. It will still be beneficial but won’t provide quite the same energy savings as NEM does.

The NY-Sun Megawatt Block program provides benefits based on enrollment, and the blocks for each area throughout the state can close as they fill up. It’s unclear where the blocks currently stand, but they can close at any time, much like the block for the Long Island area did.