Is net metering going away in New York?
Feb 2, 2023Following major changes to California’s net metering program, you may be wondering if the current net metering system could be going away in New York too. At a time when…
NY solar incentives and surging electricity rates make New York City one of the best solar markets in the country. Something we love about our work is informing homeowners about these incredible city, state and federal offerings that make installing solar panels incredibly affordable.
These NYC solar tax credits and rebates can cover up to 70% or more of the gross cost of most residential solar projects, which is a major advantage of installing solar. We’ve broken them down for you here.
Disclaimer: Brooklyn SolarWorks are not financial professionals. As much as we’ll always strive to provide our customers with the most accurate information regarding solar tax incentives, we are not tax experts. Please consult your tax advisor for guidance on filing for credits with respect to your specific circumstances.
One of the best NY solar incentives to take advantage of is the New York State Solar Income Tax Credit. This credit, also known as the NYS Solar Energy System Equipment Credit, allows NYS homeowners to claim 25% of their solar system costs – up to $5,000 – as a credit on their state income taxes.
This credit, like the federal solar income tax credit, is non-refundable, meaning you cannot use it to increase your refund from the state government. However, if the credit exceeds your tax liability for a single year, the credit can be carried over for up to five tax years.
You are eligible to claim this credit if:
To claim this credit, you will need to file Form IT-255 “Claim for Solar Energy System Equipment Credit” with your New York State income taxes. You can get more information and download Form IT-255 here.
Through the NY-Sun Program, the New York State Energy Research and Development Authority (or NYSERDA) provides cash incentives to build solar in different regions of the state. This incentive is a rebate that reduces the upfront contract price of New York State residential solar projects.
The rebate for NYC residential projects is currently $.20 per Watt of solar installed. Note that the rebate amount declines over time based on how much solar is installed in each region of the state.
In addition to the rebate, NYSERDA also provides a number of solar panel financing options for New York residents looking to invest in solar for their home.
This rebate differs from the other NY solar incentives we’ve listed here in that it is paid directly to the installer, then passed on in full to the customer. In order to secure this rebate, or finance your solar installation through this program, you will need to work with a NYSERDA-approved participating installer.
Brooklyn SolarWorks is an approved NYSERDA contractor. Contact us to learn about the rebates and financing options available to you through this program.
The NYC Property Tax Abatement for solar allows NYC homeowners to claim 20% of solar system costs as a property tax abatement with the NYC Department of Finance. It is divided into annual 5% installments over a four year cycle, not to exceed any one year’s property tax liability.
Be aware: the NYC PTA will only be available for projects installed through 2023.
Brooklyn SolarWorks claims the PTA on your behalf during the permitting process. Building permits signed off by March 15th will have their property tax abatements initiated the following July.
For more information, you can view the DOB’s Form PT4: Property Tax Abatement for Solar Electric Generating System.
The New York State Historic Homeowner Tax Credit Program is little known, but very valuable. Through this program, the state is effectively paying eligible homeowners to optimize their homes through improvements like solar power.
The credit covers 20% of qualified rehabilitation costs of owner-occupied historic houses, up to a credit value of $50,000.
Note that not all NYC homes can qualify for this credit. NY State Historic Tax Credits only apply to certain districts in the city as designated by the NYC Landmarks Preservation Commission. Want to know if your home qualifies? Speak with a solar specialist today.
In addition to living in a designated historic community, your solar panels must be installed on the home that you owned and resided in during the specified tax year in order to qualify.
To claim this credit, you’ll need to file Form IT-237, “Claim for Historic Homeownership Rehabilitation Credit” with your New York State taxes. Because qualification for this credit can be trickier, BSW can provide support in filing for it.
For more information about the NY State Historic Tax Credit, you can view instructions and Form IT-237.
Beyond tax incentives, one of the other great benefits of going solar in NYC is net metering in New York. Net metering is a billing mechanism that allows you to store your solar energy as a retail energy credit to be used at a later date.
In other words, your solar system will likely produce more energy than your home needs. That excess energy is sent back into the grid, and Con Edison compensates you for it in the form of retail energy credits that are applied to your future bills. So even though solar battery installations aren’t permitted in NYC yet, you can still utilize the extra solar energy your system produces.
Because of net metering, many of our customers reduce and even eliminate their monthly electric bills.
Another great incentive to take advantage of is the solar Investment Tax Credit (ITC), or federal solar income tax credit. The ITC allows homeowners to deduct up to 30% of their solar system installation costs from their federal income tax. If the credit exceeds a taxpayer’s single year tax liability, they can divide the credit over multiple years.
Most recently, the 30% federal tax credit was extended in August 2022 for an additional 10 years. The credit will drop to 26% in 2033, then to 22% for residential installations in 2034.
To claim this credit, you’ll need to fill out IRS Form 5695 for Residential Energy Credits when filing your federal taxes.
Allow us to do the math for you: if your project qualifies for all of the incentives listed above, you could see a reduction of up to 85% of your costs. Even if you’re not eligible for all of these, a majority of your costs can still be covered – in addition to the savings you’ll be receiving on each month’s electric bill. And above all, solar systems increase overall NYC property values by approximately 5.4%.
If you’re seriously considering solar for your home, act quickly so that you can yield the full solar incentives while they last. (Plus, we think you deserve the extra bucks for prioritizing your environmental impact.)
Get started today! Contact us to chat about which NY solar incentives you could be eligible for.
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