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. Some of these incentives are tax related and vary from case to case, so you should consult your tax professional to determine your eligibility for tax benefits.
Federal Investment Tax Credit (ITC) / Production Tax Credit (PTC): The ITC is a tax credit (not a deduction) that can reduce the amount of federal income tax you owe or increase your tax refund. The ITC is set at 30% of total system cost (less any NY-Sun rebates) for commercial systems that commence construction prior to January 1, 2025. Systems under 1 MW commencing construction after that date, as well as all systems over 1 MW, are subject to different rules. For more information, visit DSIRE.
In lieu of the ITC, commercial solar system owners who sell their electricity to an unrelated party may opt for a Production Tax Credit (PTC). This is an inflation-adjusted tax credit based on the amount of electricity sold during a tax year, available for the first 10 years a system is in operation. 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). This form of depreciation can be claimed over an accelerated five-year period. For more information, visit: IRS Publications and DSIRE.
NY-Sun Incentive: The NY-Sun Initiative provides incentives for installing solar electric systems throughout the state. Incentives are distributed through 3 regions: Con Edison, PSEG Long Island, and Upstate. Incentives for NYPA customers are based on the utility operating in their region. The NY-Sun incentive is funded by the System Benefits Charge (SBC) that appears on your utility bill.
Under the Megawatt Block incentive structure, each region and sector (commercial or residential) is assigned a series of MW targets at certain incentive levels, referred to as “blocks.” As applications are submitted, incentives at the current level are claimed until the MW target for that block is reached. The block is then 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 State Sales Tax Exemption: The law exempts the sale and installation of commercial solar energy systems equipment from state sales taxes. DSIRE The law also allows counties and municipalities to exempt these costs from local sales tax. A list of those local governments that do not exempt commercial systems is available here.
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, 2024 are eligible for a four-year Tax Abatement of 5% per year of the installed cost of the system (less the NY-Sun rebate) for 4 years (total of 20%). Abatements are capped at $62,500 per year or $250,000 total. 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.