Federal, state and 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 residential building in New York State. Many of these incentives are tax related and vary from case to case.*
Federal Tax Credit: Residential building owners 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. For more information, visit: DSIRE
For example, the federal tax credit for a 7 kilowatt residential solar installation that costs $35,000 would be $10,500. 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.
NY-Sun Incentive: The NY-Sun Initiative provides incentives for installing solar electric systems. Incentives are distributed through 3 regions: Con Edison, PSEG Long Island, and the Balance of the State.
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 Dashboard. In general, incentives for a typical residential or commercial system cover approximately 20-30% of the installed cost of a PV system. Note the NY-Sun Incentive is paid directly to the installing contractor.
New York State Tax Credit: Residential building owners who install solar may be eligible for a tax credit for the lesser of 25% of the installed cost of the solar energy system (up to 25 kW on net-metered systems) after the NYSERDA incentive, or $5,000. Be advised that the federal government considers this state tax credit taxable income. For more information, visit: DSIRE
Sales Tax Exemption: New York enacted legislation in July 2005 exempting the sale and installation of residential solar-energy systems from the state's sales and compensating use taxes. The exemption applies to solar-energy systems that utilize solar radiation to produce energy designed to provide heating, cooling, hot water and/or electricity. The exemption does not apply to solar pool heating or other recreational applications. In addition, New York City and some other local jurisdictions granted exemption from local sales and uses taxes for residential solar energy systems but did not do so for commercial systems. DSIRE
NYS Historic Homeownership Rehabilitation Tax Credit: This credit can reduce the cost of solar projects by 20% for homeowners in eligible districts. The Historic Homeownership Rehabilitation Credit (HHRC) covers 20% (up to a $50,000 in credits) of the cost of improvements – including solar installations – that are completed on owner-occupied homes located within:
1. historic districts listed on the National Register of Historic Places AND
2. income-qualified census tracts.
These zones continue to form and expand.
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 to January 1, 2021 are eligible for a four-year Tax Abatement of 5% per year of the installed cost of the system, for a total of up to 20%. Abatements are applied after the NY-Sun Incentive, and capped at $62,500 per year or $250,000 total. This tax abatement is spread equally over four years, and may not exceed your property tax liability for any given year.
If you wish to apply for this incentive, you or your solar installer will need to hire a New York State registered architect or professional engineer to file the paperwork with the Department of Buildings. For more information, visit: NYC DOB Tax Abatement
For example, the calculation for a 7 kilowatt solar installation that costs $35,000 minus a $4,200 NY-Sun Incentive, would be: ($35,000 - $4,200) x 20% = $6,160 total PTA divided into 4 year increments