New York Solar Incentives for 2024
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For almost 50 years, New York has been dedicated to growing its clean energy use, including solar energy. The state offers solar incentives to encourage residents to convert to renewable energy. Two of its top incentives, an equipment tax credit and net metering, help lower installation costs and offer additional savings over time.
We researched local and state New York incentives as well as federal options. Our guide details each available solar incentive, offers guidance on how to apply, and recommends leading solar providers in New York.
What Solar Tax Credits and Rebates Does New York Offer?
New York’s clean energy initiatives began as early as 1975. According to the Solar Energy Industries Association, New York consistently ranks as one of the top 10 solar markets in the United States. Its Clean Energy Standard initiative aims to get 70% of the state’s energy from renewable sources by 2030. Although large-scale solar growth has been slow, the state excels with small-scale projects, which include rooftop solar installations. The U.S. Energy Information Administration (EIA) reported that in 2022, New York ranked third in the nation in electricity generation from small-scale projects.
New York offers several solar incentives and credits to encourage continued solar energy growth to reduce homeowners’ solar installation costs. Here’s an overview of the incentives available to New York residents.
| Incentive | Type | Where It Comes From | What It Provides |
|---|---|---|---|
| Federal solar tax credit | Tax credit | Federal | Lets you claim up to 30% of solar system costs on federal income taxes |
| Net metering | Bill credit | State | Offers bill credits in exchange for your excess generated solar energy |
| NY State Solar Energy System Equipment Tax Credit | Tax credit | State | Receive a 25% credit on your solar energy system equipment costs (up to $5,000) |
| NY-Sun Initiative Megawatt Block Program | Rebate | State | Receive $0.20–$0.50 per kW rebates for residential solar panel systems |
| Solar Project State Sales Tax Exemption | Sales tax credit | State | Exempts New York’s 4% sales and use tax from your solar system purchase |
| Clean Energy Systems Property Tax Exemption | Property tax credit | Local | Exempts 100% of increased property taxes from a solar installation for 15 years |
Can You Qualify for a Federal Solar Tax Credit in New York?
Yes, most New York residents can qualify for, and should consider the federal solar tax credit or the solar Investment Tax Credit (ITC). This incentive offers home solar customers a 30% tax benefit on solar system costs and energy storage equipment. The policy was introduced as part of the Energy Policy Act of 2005 and was initially set to expire in 2007. However, Congress has extended the program under the Inflation Reduction Act (IRA) in 2022.
The current incentive, the Residential Clean Energy Credit, will remain at 30% until 2033. It will then be reduced to 26% before dropping to 22% in 2034. Unless Congress renews it again, it will end in 2035. You can also claim the 30% credit for stand-alone solar batteries with a minimum capacity of 3 kilowatt-hours (kWh). Most of the best regarded solar batteries meet this requirement. The battery doesn’t have to be directly tied to a solar system to qualify.
This incentive is not a cash payout or a refund. Instead, the credit applies to your federal income tax, helping reduce your liability. Any remaining credit will roll over to the next tax year. You must legally own your solar panel system to qualify. Buying your system outright or with a solar loan gives you legal ownership. However, other means of financing solar projects, such as a solar lease or a power purchasing agreement (PPA), will disqualify you from this incentive.
Does New York Offer Net Metering?
The New York State Public Service Commission (PSC) enacted net metering in 1997 primarily for residential solar customers. Net metering allows solar owners to exchange excess solar power back to electric companies for credits on their electric bills. In New York, net-metering policies apply to residential systems up to 25 kilowatts (kW) of capacity. Although introduced statewide, net-metering policies vary between utility companies. Some of the top programs include Consolidated Edison (Con Edison), National Grid, and PSE&G.
In recent years, New York has introduced several major changes to its net metering policy. In 2022, the state introduced two net-metering options for new solar customers: Phase One Net Metering and the Value of Distributed Energy Resources (VDER). Both options include a Customer Benefit Contribution (CBC) of $0.69–$1.09 per kW per month, which varies based on system size and utility provider. Here’s an overview of each option:
- Phase One Net Metering: This version offers a more traditional 1:1 credit for excess solar energy. You’ll earn one credit equal to one kilowatt-hour (kWh) of electricity. Payout rates vary by utility company. No end date is set, but this program will eventually be phased out.
- Value of Distributed Energy Resources (VDER): VDER, or Value Stock, offers compensation based on several factors beyond the exchanged energy. Additional factors include the environmental value of solar electricity, the wholesale electricity price, and how the exchanged energy helps reduce power demand at the time. It’s more complicated than the Phase One Net Metering program, but it will be in place for the foreseeable future.
Other Ways To Save on Solar in New York
New Yorkers can extend their solar savings with the following state solar incentives and credits.
NY State Solar Energy System Equipment Tax Credit
The NY State Solar Energy System Equipment Tax Credit equals 25% of your qualified solar energy system equipment expenditures up to $5,000. For example, investing $20,000 toward qualifying solar equipment can get you a $5,000 (25%) state solar tax credit.
You’re able to claim this credit if you do the following:
- Purchase solar system equipment.
- Enter into a written agreement to lease solar system equipment.
- Enter into a written agreement that spans at least 10 years for the purchase of power generated by solar energy system equipment not owned by you.
NY-Sun Initiative Megawatt Block Program
Run by the New York State Energy Research and Development Authority (NYSERDA), the NY-Sun Initiative Megawatt Block Incentive offers upfront dollars-per-watt rebates for residential solar panel systems. The NY-Sun program divides the state into regions based on utility providers. These regions include Con Edison, PSE&G Long Island, and all remaining areas under Upstate. Your system must be under 25 kW and installed by a NY-Sun-approved contractor to qualify for this incentive.
NY-Sun assigns a certain number of incentives to each region. It then divides each region into blocks and assigns a megawatt (MW) limit for these incentives. Once a block reaches this limit, the incentive is no longer available.
Home Solar Project State Sales Tax Exemption
New York exempts the state’s 4% sales and use tax for home solar system installations. However, this exemption only applies to state sales taxes. You may be subject to local sales tax with your solar purchase. Certain areas, including New York City, offer city-specific exemptions for local taxes. We recommend checking the New York Department of Taxation and Finance for a full list of local tax exemptions.
Clean Energy Systems Property Tax Exemption
The Clean Energy Systems Exemption eliminates your property tax increases due to solar upgrades. Typically, solar systems increase your property value, resulting in higher property taxes. However, this incentive removes 100% of these increased taxes for up to 15 years.
How Much Do Solar Panels Cost in New York?
The average New York solar panel cost is $15,507 for a 5 kW system. This price doesn’t include any federal or state solar incentives. With the federal solar credit alone, you can save more than $4,600 for your system. Savings increase with a larger solar system installation. Below, we’ve outlined estimated savings for different New York solar panel system sizes.
| System Size | Average Cost | Cost After Federal Tax Credit |
|---|---|---|
| 5 kW | $15,507 | $10,295 |
| 6 kW | $17,649 | $12,355 |
| 7 kW | $20,591 | $14,414 |
| 8 kW | $23,533 | $16,473 |
| 9 kW | $26,474 | $18,532 |
| 10 kW | $29,416 | $20,591 |
How To Apply for Solar Incentives in New York
We recommend working with your solar energy provider to review the available solar incentives and get guidance on how to apply. Here’s a quick overview of each application process to help you get started.
Federal tax credit
You must complete and file IRS Form 5695 to claim the federal tax credit. The IRS website provides detailed instructions. We recommend working with a tax professional to help you complete the form correctly.
Net metering
You should contact your utility company for details and an application for its net metering program.
System equipment tax credit
You must complete and file Form IT-255 to receive the equipment tax credit. The New York Department of Taxation and Finance offers full instructions on the process.
NY-Sun Megawatt Block Program
Visit the NY-Sun Initiative website for details on participating solar contractors and programs available in each region.
State sales tax exemption
The New York Department of Taxation and Finance offers instructions on form submission for your solar contractor and system owners.
Property tax exemption
You must complete and submit Form RP-487 for the exemption. The New York Department of Taxation and Finance provides full instructions on its website.
New York Solar Companies We Recommend
We’ve provided a list of our picks for top New York solar companies to assist in your decision-making process.
- Sunrun: Sunrun offers comprehensive solar leasing options, including a 25-year performance guarantee and protection for panel damage or theft. For more details, read our complete analysis of Sunrun.
- Momentum Solar: Momentum Solar completes installations with its in-house team and assists with solar incentive applications. Read our detailed review of Momentum Solar.
Is Going Solar in New York Worth It?
Yes, it’s worth it to go solar in New York. It has a higher electricity rate than most of the country. According to the EIA, NY residents paid 22.52 cents per kilowatt-hour (kWh) for electricity in 2023, more than 43% higher than the national average. Moving to renewable energy helps you reduce your reliance on grid-tied electricity, effectively lowering your energy costs. With most solar panels lasting 25 years or longer, you benefit from two decades or more of energy savings.
To maximize your installation savings, we recommend applying for the available federal, state, and local incentives in New York. You should check for additional local sales tax exemptions for your area. Your solar installer can help you maximize your savings and apply for incentives. Remember that your chosen solar financing option also affects your qualifications, so consider these options when investing in a solar panel system.
FAQ About New York Solar Incentives
Can you get free solar panels in NY?
No, New York does not offer free solar panels. However, you can utilize state and local incentives to help reduce your installation costs. You can also apply for the federal solar credit, which can give you up to 30% back on investment costs.
Does New York have a solar tax credit?
Yes, New York does offer a NY State Solar Energy System Equipment Tax Credit, which provides up to 25% back for residential solar equipment costs. This credit applies to your state taxes to help reduce or eliminate your liability.
Do solar panels increase property taxes in NY?
Yes, solar panels will increase property value in NY. The state government offers a Clean Energy Systems Exemption to eliminate 100% of increased property taxes for residents for 15 years.
Is New York getting rid of net metering?
No, New York isn’t getting rid of net metering. However, state officials are transitioning from a traditional net metering program to a Value of Distributed Energy Resources (VDER) alternative. This method considers other factors, including electricity pricing and energy demand when determining compensation pricing.
Our Rating Methodology
We are committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:
- Solar equipment, installation, and services (25%)
- Warranty and performance guarantees (25%)
- Brand reputation and certifications (15%)
- Financing options (15%)
- Experience (10%)
- Availability (10%)
Total scores are divided by 20 for a final 5-point rating scale.
To share feedback or ask a question about this article, send a note to our Reviews team at [email protected].
