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Residential Solar Tax Credit

Eligibility 
Multi-Family Residential
Residential
Savings Category 
Photovoltaics
Solar Water Heat
Maximum Rebate 

5,000 for solar-energy systems

Program Info
Start Date 

01/01/1998 (solar electric); 01/01/2006 (solar thermal)

State 
New York
Program Type 
Personal Tax Credit
Rebate Amount 

25% for solar-electric (PV) and solar-thermal systems; for third-party owned systems this is in reference to the aggregate amount owed under the contract rather than the amount owed in any single year

Provider 
New York State Department of Taxation and Finance

Enacted in August 1997, this personal income tax credit originally applied to expenditures on solar-electric (PV) equipment used on residential property. The credit, equal to 25% percent of the cost of equipment and installation, was expanded in August 2005 to include solar-thermal equipment. The solar-thermal provisions apply to taxable years beginning on and after January 1, 2006. The credit is capped at $3,750 for solar-energy systems placed in service before September 1, 2006, and capped at $5,000 for solar-energy systems placed in service on or after September 1, 2006.

In August 2012 the credit was amended yet again (A.B. 34) to allow it to be claimed for systems installed under lease or power purchase agreements (PPAs) of at least 10 years in length. For third-party owned systems, the residential homeowner may claim a tax credit in the amount of lease or PPA payments made during the taxable year, for up to 15 years. The 25% incentive for such systems refers to aggregate amount of payments owed rather than the amount made during any single year. The maximum allowable tax credit amount of $5,000 applies to the total amount of credits claimed regardless of the ownership arrangement. The new law has an effective date of August 17, 2012. It is unclear at this time whether tax credit claims for third-party owned systems will be permitted for installations made prior to this date.

Solar-energy equipment is defined as "an arrangement or combination of components utilizing solar radiation, which, when installed in a residence, produces energy designed to provide heating, cooling, hot water or electricity." The credit may not be used for pool heating or other recreational applications. Any amount of credit that exceeds a taxpayer's liability in a given tax year may be carried forward for the five following taxable years. Any portion of the system cost provided by a non-taxable federal, state, or local grant is not eligible for this credit.

In general systems must comply with the 25 kW capacity limit on residential, net-metered solar-energy systems*. In 2007, legislation was passed increasing the capacity limit to 50 kW for condominiums and cooperative housing associations. In addition, members of condominium management associations and tenant stockholders of cooperative housing associations are now allowed to claim a proportionate share of the total system expense towards the tax credit. These changes took effect beginning in the 2007 tax year, but as with other portions of the tax credit, they do not have an expiration date.

*The language of the tax credit generally requires that PV systems conform to the state's net metering law. In August 2008, the state net metering law was expanded by S.B. 7171 to increase the net metering size limits for residential PV systems from 10 kW to 25 kW. While several subsequent versions of the tax credit claim form did not reflect this change, the 2011 Solar Tax Credit [http://www.tax.ny.gov/pdf/2011/fillin/inc/it255_2011_fill_in.pdf Form IT-255] uses revised language which no longer references the former 10 kW limit.

Other Information 

Systems must be new and in compliance with all applicable performance and safety standards