New York Solar Incentives & Tax Credits for Residents, Businesses

New York's renewable energy focus makes it one of the best places in the country to power your home with solar. No, the state doesn’t get as much sunlight each year as Florida or California. But it has something even better: solar incentives and tax credits. Thanks to these programs, you can get the benefits of solar energy at a much lower price.

There are many different solar incentives in the Empire State. Most of them help you install a solar setup for less. Through various programs, you can save on solar panels for your home, your business, or even an institution or government building. But you can also go solar indirectly by joining one of New York’s many community solar projects and enjoy similar cost-savings as having your own rooftop panels, but without the hassle or cost of installation and ongoing maintenance.

We’ll break it all down below and help you understand what solar incentives and tax credits are available to you in New York.

What are solar incentives and solar tax credits?

Solar power has many obvious advantages. It’s a renewable energy source that produces no carbon emissions when used. And the only fuel it requires is free sunlight. But solar setups have one big downside: the installation cost. Many homes and businesses aren’t getting the perks of solar because they can’t afford this upfront cost (or just don’t want to pay it).

That’s where solar incentives come in. These programs encourage people to switch to solar power by lowering its cost. Most incentives come from the government—federal, state, or local. But utilities can also offer them as a way to green the grid.

One common type of incentive is a solar tax credit. This allows you to deduct all or part of the cost of installing solar panels from your tax bill. The federal government offers solar tax credits for homes and businesses, and many states—including New York—do the same. If you live in one of these states, you can stack your solar credits. When you go solar, you can take a discount on both your federal and state tax returns.

Most solar incentives and credits are aimed at helping homeowners and businesses install their own solar setups. This kind of solar has the highest upfront cost, so it needs discounts to make it attractive. But there’s another way to enjoy the benefits of solar at a lower cost: community solar.

When you join a local community solar farm, you don’t need incentives to lower your cost—because there is no upfront cost! You “subscribe” to a share of the power that the farm produces, and in doing so you get rewarded with a discount on your own electricity bills. We’ll cover community solar more below.

Are there solar tax credits in New York state?

Yes, there are many solar tax credits available to New York residents. In most areas, you can save on your federal, state, and local property taxes, all at the same time.

Federal Solar Tax Credit for New York State Residents

The U.S. government offers a federal solar tax credit on new home solar systems. If you install a solar setup in 2022, you can take 26% of the cost off your federal tax bill.

This credit drops to 22% in 2023, and in 2024 it ends entirely.

You can only claim this credit on a new solar setup that’s installed before December 31, 2023. You must also own the panels, not lease them. In most cases, the panels must be installed at your primary or secondary home. However, you can get credit for panels you own at a shared solar farm as long as they don’t produce more energy than you use.

There’s a federal solar tax credit for businesses as well. They can use IRS Form 3468 to claim the Investment Credit for new solar electric or heating projects. For projects started in 2022, the credit is equal to 26% of the cost. It drops to 22% for projects installed from 2023 through 2025 and to 10% after that.

New York State Solar Energy System Equipment Credit

New York residents can also claim a tax credit from the state for new solar systems. The credit is equal to 25% of the cost, up to a maximum of $5,000. If the credit is more than you owe in New York income tax, you can’t get a refund from it. However, you can carry over the balance to future tax years.

Unlike the federal credit, New York’s Solar Energy System Equipment Credit applies to both purchased and leased solar systems. You can also claim it if you lease panels in a shared solar farm for at least ten years.

The New York credit isn’t just for solar panels. You can also claim it for solar heating, cooling, and water heating systems. However, it only applies to equipment installed and used at your primary residence in New York state.

New York State Real Property Tax Exemption

Putting solar panels on your home or business adds to its value. Under normal circumstances, that would mean an increase in your property tax bill. However, in most New York municipalities, you can avoid this tax increase. Just fill out a copy of Form RP 487 and file it with your local property assessor.

Note that some municipalities and school districts have opted out of this property tax exemption. You can check this list to see if your town is one of them.

Are there other solar incentives in New York state?

Tax credits aren’t the only kind of solar incentive available for New York residents. The NY-Sun initiative also offers solar incentives and financing options for both homes and businesses. In addition, residents who install solar setups can take advantage of net metering to lower their utility bills.

The NY-Sun initiative

New York’s NY-Sun program aims to make solar affordable and easy to use throughout the state. It offers a variety of incentives and financing options for both homes and businesses. It also helps New York residents find community solar options in their area, as discussed below.

The MW block structure

The cost of installing solar varies throughout New York state. To make sure solar incentives go where they’re needed most, the NY-Sun program is organized by region. Each region is broken into “blocks,” and each block gets a certain number of megawatts (MW) that are eligible for incentives at a given cost.

Each incentive given out through NY-Sun counts against the number of MW allocated to its block. When all the MW have been given out, there are no more incentives available in that block.

Thus, you can’t always get a NY-Sun incentive for a new solar system. The availability and cost depend on how many incentives have already been given out in your area. You can check the current incentive levels for your region on the MW Block Dashboard.

NY-Sun solar incentives

The NY-Sun program isn’t like a tax credit that homeowners can claim directly. Instead, the program works with solar contractors and developers. They help homeowners apply for incentives and file the appropriate paperwork.

To learn what incentives you qualify for, your first step is to find a contractor who participates in the program. They’ll inspect your home and figure out what kind of solar system is best for you. Then they’ll help you apply for incentives and financing. NY-Sun notifies the contractor when your project is approved. From that point, you have one year to get it installed and claim your benefits.

If your income is less than 80% of the median for your area, you can get extra incentives through Affordable Solar. To qualify for this program, you must complete some minor, low-cost upgrades to your home’s energy efficiency. You must also fill out an Income Eligibility Application, either on your own or with a contractor’s help.

NY-Sun offers solar incentives for businesses as well. These incentives vary throughout the state. Like residential solar incentives, these are available through solar contractors.

NY-Sun financing options

NY-Sun offers a variety of financing options for residential solar projects. They include:

• On-Bill Recovery Loans of up to $25,000, which let you pay for your solar installation bit by bit on your monthly utility bill.
• Smart Energy Loans of up to $25,000, which you pay through the New York State Energy Research and Development Authority (NYSERDA) loan servicer.
• Companion Loans, which you can use to pay for the extra cost of a solar project that costs more than $25,000.
• Renewable Energy Tax Credit Bridge Loans, which help you use your federal, state, and property tax credits to pay for your solar project.

To learn about eligibility and how to apply for On-Bill Recovery and Smart Energy Loans, check out Energy Finance Solutions. To apply for a Companion or Bridge Loan, speak with your contractor.

On-Bill Recovery Loans are available for small businesses and not-for-profits, as well as homeowners. Businesses can also take advantage of Small Commercial Participation Loans. These cover up to 50% of the cost of a project up to $100,000 at below-market interest rates. Or they can apply for an OPEN C-PACE loan from the Energy Improvement Corporation, a non-profit, local development corporation. NYSERDA has more info about all these loan options.

Energy storage incentives for businesses

Businesses that pair solar with energy storage, such as batteries, can qualify for energy storage incentives. For projects up to 5 MW, they get an upfront payment for each kilowatt-hour (kWh) of energy storage they install. The state incentive dashboard shows the amount of this payment by region. Like NY-Sun incentives, this benefit is available only through participating contractors.

In addition, businesses can get financing for energy storage projects through the Commercial Property Assessed Clean Energy (PACE) program. This helps businesses pay for a project over time rather than making a large up-front investment.

Net metering in New York State

When you have solar on your home, you sometimes produce more power than your home is using. That extra power goes into the grid and others can use it. When this happens, you get credit on your bill for the extra power you produce. It’s like running your electric meter backward. This is called net metering.

Unfortunately, in New York, customers who take advantage of net metering must pay a fee for it. This fee is called the Customer Benefit Contribution, or CBC. According to Utility Dive, the amount ranges from $0.69 to $1.09 per kWh, depending on your utility.

The CBC somewhat weakens the benefits of net metering in New York state. However, it still allows you to get some money back for the power you supply to the grid.

How much does it cost to install solar panels in New York?

The cost of going solar varies by state. According to Consumer Affairs, the average cost in New York is $2.86 per watt installed. Most solar systems are measured in kilowatts (kW), which is 1,000 watts. And the typical U.S. solar system is 6kW, so it could cost you over $17,000 to install a system.

However, $2.86 per watt is only an average. It’s possible to get a 6kW system for as little as $15,900 starting cost before tax credits. A 26% federal tax credit can lower that to as little as $11,766. And state incentives can lower it still more.

Save even more with community solar in New York—no rooftop panels required

Rooftop solar isn’t an option for everyone. For some people, the upfront costs are too high even after incentives. Renters and condo owners can’t add solar because they don’t have eligible roofs. And some homeowners or business owners do have roofs, but they don’t get enough sun to make solar cost-effective.

If that's you, there’s still a way to enjoy the cost-savings and environmental benefits of solar without a rooftop system. It’s called community solar. Instead of putting panels on your own home, you “subscribe” to a share of a solar farm in another location (usually within your city or town or nearby). The solar farm generates clean energy for the overall grid, and you get rewarded for supporting that clean energy in the form of credits—or a discount—on your own electricity bill. 

Learn more about how community solar works >

Community solar has some big advantages compared to a rooftop system. There’s no installation process and no paperwork to apply for incentives. And for many projects, there’s no upfront cost.

Another perk is that if you move, your solar share goes with you. As long as you stay within range of the solar farm, you’ll continue to get credit for the power your panels produce. You definitely can’t do that with rooftop solar.

Community solar is a fast-growing option in NY. As of March 2022, it had topped 1 gigawatt (GW), according to POWER magazine. And there are more than 700 projects in the works that could generate another 2.3GW. 

It’s easy to get the benefits of community solar in New York. With Perch, you just sign up and we’ll check to see if there’s an eligible local solar farm in your area. If so, you’ll be matched and start saving money as soon as your next electricity bill. Community solar is available for homes, businesses, schools, and even municipal governments.

Check if there's a New York community solar farm near you >

Is it worth going solar in New York state?

Going solar is a great idea no matter where you live. This green, renewable energy source has big benefits for the environment. And even without incentives, it saves you money in the long term.

But in New York, it’s an even greater idea. Thanks to the state’s solar incentives, you can start saving a lot faster with your own solar setup. And the fast growth of community solar projects makes it easy to go solar without needing to install anything. No matter which kind of solar you choose, it’s a win.