There are many tax incentives that homeowners can qualify for when they choose to install solar panels on their property. Let’s dive into the federal and New York state solar to ensure that you keep as much money in your pocket as possible.

Average Cost of Solar Panels in NYC

As with most things in New York, the average solar installation cost is higher than other states.

‍CNet reports that the average price of a New York solar install is $32,680 – which is about $2,440 higher than the US average.

Keep in mind that the total price of your installation will depend on factors such as the features and size of your property, needed installation preparations, and your installer’s quote.

How much money do solar panels save you?

New York state offers net metering, which SolarReviews defines as the requirement of a utility company to purchase the extra solar energy that a homeowners’ panels produce.

In simpler terms, if your solar panels produce 60 kilowatt hours of electricity but you only use 30 kilowatt hours, your utility provider would purchase the extra 30 kilowatt hours from you for full retail price. 

This purchase shows up as a credit on your energy bill.  Yes, this means that as a resident of New York, you must stay connected to the grid and continue to pay your utility company’s small monthly service charge, which is usually $18 to $20. 

During nights or darker days when your solar panels are generating less electricity than needed to power your home, your energy supply will dip back into the grid by using the credits on your account to purchase the power back.

And, there are some big pros to this! Installing solar will likely save you money on your electric bill as soon as your panels begin to generate excess energy. 

For instance, the U.S. Energy Department details how a young couple in New York took out a no-money-down loan for a solar installation on their flat roof. With monthly loan payments of $150 over eight years, they still save $220 a month on electricity.

Incentives for Solar Panels

Federal Solar Tax Credit

The US government offers a tax credit to qualified homeowners who invest in renewable energy, or, for the purpose of this video, purchase solar panels for their main homes.

A tax credit is defined by the IRS as a dollar-for-dollar amount that taxpayers claim on their tax return to reduce the income tax they owe.

In the case of solar panels, the government offers a 30% tax credit, or 30% of the costs of new, qualified solar equipment that is installed between 2022 and 2032. However, it’s important to note that this percentage will reduce to 26% in 2033 and 22% in 2034.

What to Know Before You Apply:

1. There are no annual or lifetime limits to this credit. For example, if you purchase two qualifying solar systems in a year, you can receive two federal solar tax credits. The same goes for future purchases up until 2033.
2. The federal solar tax credit is non-refundable and won’t cover more than what you owe in taxes. Any excess credit can be applied to your taxes in future years.

Qualifying for the Federal Solar Incentive

If you own or rent your main home in the United States, your ‘main home’ being the home you live in most of the time, you can qualify for the federal solar tax credit. In certain cases, you may be able to claim the credit for other homes that you live in part-time. 

Unfortunately, landlords and property owners who do not live in the home do not qualify.

Full-time business properties are also not eligible for this credit. If your property is only partly used for business purposes, you may qualify for partial credit.

New York State Solar Incentives

Each state is different when it comes to their solar incentives and programs. In this video, we’re focusing on New York State because that’s where MPower Solar is located.

New York state’s solar program, also known as NY-SUN, offers residents three incentives– the NYS tax credit, the NYS Real Property Tax Exemption, and the NYC Real Property Tax Abatement.

The New York State Solar Tax Credit

Just like its federal counterpart, this state tax credit is a dollar-for-dollar amount that homeowning taxpayers can claim on their tax return to reduce the income tax owed.

Qualified solar systems are eligible for the NY-SUN credit, which equals 25% of the cost of the equipment. This non-refundable credit is limited to $5,000 and it can be carried over for up to five years.

Qualifying for the NYS Solar Tax Credit

To qualify for this state tax credit, the equipment you purchase must use solar radiation to produce energy for use at your main home. Plus, you’re eligible whether you purchase the equipment, lease it, or enter into a 10+ year purchase of power agreement.

The New York State Real Property Tax Exemption

This exemption ensures that the installation of solar panels will not increase your property taxes even if your property value increases. Unfortunately, some city governments have chosen not to participate in this program, so it’s important that you research before you apply. New York City residents also do not qualify for this incentive.

The New York City Real Property Tax Abatement Program

In place of the state property exemption, residents of NYC are eligible for a property abatement program which lessens the amount of property taxes owed.

This abatement is offered to qualifying NYC residents for a period of four years. Through January 1, 2035, the four-year abatement can equal 7.5% of the total installation cost, the amount of your annual property taxes, or $62,500 – whichever happens to be lowest.

Qualifying for the NYC Real Property Tax Abatement Program

To qualify, the system must use solar energy to generate electricity but the abatement can be applied to residential or commercial installations

Shedding Light

That covers the 30% federal solar tax credit, the 25% New York tax credit, and New York’s two property tax programs. To begin your solar installation project or for more information – contact us today.