In the United States, New York is one of the handfuls of states that is emerging as a leader within the solar energy industry. The municipalities within the state of New York have been very generous with numerous different programs to incentivize residents to install solar electric panels on their residence. New York’s Solar Equipment Tax Credit is one of these main incentives. With this tax credit, a homeowner that goes with a solar electric installation can receive up to a 25% tax credit. In addition to the equipment tax credit New York State residents also are rewarded by going solar with 0% sales tax of the installation and as well as a property tax exemption for fifteen years. Last but certainly not least the Federal solar tax credit adds to the financial benefits with a 26% tax deduction credit off their federal taxes.
What is the New York State Solar Equipment Tax Credit?
The New York State Solar Equipment Tax Credit was enacted by the New York State Senate on August 2nd of 2005. The solar equipment tax credit is equal to 25% of the total cost of the solar installation or $5,000 whichever is lower. The NYS solar tax credit is available for residential homeowners that do a solar electric and/or solar hot water installation. As a New York State resident, you will need to fill the appropriate forms to submit to file for the tax credit along with your normal yearly tax documents. As always we encourage you to consult your accountant or a tax advisor with any questions or assistance filling out the documents.
0% Sales Tax & Property Tax Exemption
In addition to the New York State Solar Equipment Tax Credit, there are a few other different ways where our customers reap the rewards from the switch to solar. One of those is that a solar electric and or solar hot water installation is exempt from the New York State sales tax. The sales tax currently in New York State is 4%, thus being if your solar electric system is costing you $25,000 you are saving $1,000 dollars outright from not paying sales tax (Formula: $25,000x.04). In addition to the sales tax exemption, New York State has an additional exemption which is a property tax exemption for capital improvements. To explain this further, once you install a solar electric system on your home that homeowner is now exempt from their property taxes raising from any future capital improvements. These capital improvements include things such as an exterior in-ground pool.
Federal Solar Tax Credit
The Federal Solar Tax Credit or more commonly called the Investment Tax Credit (ITC) was enacted in 2006 by the passage of the Energy Policy Act. Currently, the ITC allows an individual to deduct 26% of the cost of installing a solar electric system from your federal taxes. However, there will be a step down in the deduction amount of the federal tax credit from 22% in 2021 and then starting in 2022 residential solar electric installations can no longer recoup any federal tax credits.
For a Long Island homeowner to install solar panels for their home is not only a smart idea ethically for the planet but financially. As of now in 2020 a homeowner can recoup 51% of the total cost of their solar electric system through both Federal and State tax credits.
Are you interested in how tax rebates affect the total cost of your solar panel installation? Give 631-422-3500 a call today to speak with one of our team members!
1. Solar Investment Tax Credit (ITC). (n.d.). Retrieved August 10, 2020, from https://www.seia.org/initiatives/solar-investment-tax-credit-itc
2. NY-Sun(Solar Initiative). (n.d.). Retrieved August 10, 2020, from https://www.nyserda.ny.gov/All-Programs/Programs/NY-Sun/Solar-for-Your-Home/Paying-for-Solar/Tax-Credit