Federal, New York State and New York City financial incentives are available to support investments in solar. Below is an overview of the incentives available for installing a solar electric system on a commercial building in NY. Many of these incentives are tax related and vary from case to case.*
Federal Tax Credit: You are eligible to receive a federal tax credit worth:
Assuming the NY-Sun Incentive is taxable income, the total installed cost of the system is the basis for calculating the federal tax credit (if the NY-Sun Incentive is considered income, then federal income tax will be due on that amount). Some installers calculate the federal tax credit after the NY-Sun Incentive has been taken. In either instance, it is important to speak with a tax professional to ensure all IRS rules are followed.
If this tax credit exceeds your federal income tax liability the year the solar energy system is installed, you may carry the tax credit forward through the next year. For more information, visit: DSIRE.
Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation: Companies that invest in a solar energy system may be eligible for federal income tax deductions through the Modified Accelerated Cost-Recovery System (MACRS). The IRS allows commercial solar PV system owners to deduct up to 85 percent of their tax basis. This form of depreciation can be claimed over a five year period. For more information, visit: IRS Publications and DSIRE.
NY-Sun Incentive (PV system size 200 kW or less): The NY-Sun Initiative provides incentives for installing solar electric systems throughout NYS. Incentives are distributed through 3 regions: Con Edison, PSEG Long Island, and The Balance of the State (Upstate). NYPA customers are based on the utility operating in your region.
Under the Megawatt Block incentive structure, each region and sector (commercial vs residential) is assigned a series of MW targets at certain incentive levels, referred to as “blocks.” As applications are submitted, incentives are assigned and the kW associated with the applications are added together and the units are converted to MW. When the MW target for that block is reached, the block is closed and a new block, with a new target and a lower incentive level, is started. Once all of the blocks for a particular region and sector are filled, an incentive for that region and sector will no longer be offered. View real time available incentives by block on the Megawatt Block Dashboard.
NY-Sun Incentive (PV systems size 200 kW or greater): NYSERDA offers performance-based incentives through the NY-Sun Incentive Program for the installation of new grid-connected solar electric (also known as photovoltaic or PV) systems greater than 200 kW that offset the use of grid-supplied electricity. Solar electric systems must be sized primarily to serve project load. See the NY-Sun Incentive Program Manual for Commercial and Industrial for complete rules and regulations. Note the NY-Sun Incentive is paid directly to the installing contractor. View real time available incentives by block on the Megawatt Block Dashboard.
NY State Sales Tax Exemption: The law exempts the sale and installation of commercial solar energy systems equipment from state sales taxes, and allows municipalities and cities to exclude these costs from local sales tax. In addition, some local cities have exempted commercial systems from the local sales tax but NYC has not. DSIRE
New York City
New York City Property Tax Abatement (PTA): Building owners who place a grid-connected solar energy system into service from January 1, 2014 through January 1, 2019 are eligible for a four-year Tax Abatement of 5% per year of the installed cost of the system for 4 years (total of 20%). Abatements are capped at $62,500 per year or $250,000 total, applied after the NY-Sun rebate. This tax abatement may not exceed your property tax liability for any given year and application requires filing of paperwork at the Department of Buildings by a registered architect or professional engineer. For more information, visit: NYC DOB Property Tax Abatement for Solar.
An example calculation for a 60 kilowatt solar installation that costs $270,000 minus a $45,000 NY-Sun Incentive would be:
($270,000 - $45,000) x 20% = $45,000 total PTA divided into 4 year increments
*Disclaimer: the authors of this guide do not provide tax advice. You should consult your tax professional to verify your eligibility for tax benefits.