New York solar incentives & net metering (2026)

New York’s strongest solar incentive in 2026 is a 25% state tax credit capped at $5,000, which stacks with upfront NY-Sun rebates, a sales-tax exemption, and retail-rate net metering. The 30% federal credit expired December 31, 2025 — for any system installed in 2026, it is $0. At New York’s average electricity rate of around 22.6¢/kWh, the remaining state incentive stack still does measurable work.

The New York State solar tax credit: 25%, up to $5,000

New York’s Solar Energy System Equipment Credit lets you claim 25% of the purchase and installation cost of a qualifying solar electric system directly against your state income-tax liability — a credit, not a deduction, applied dollar for dollar off what you owe Albany.

The cap is $5,000. You hit the ceiling at a system cost of $20,000 (25% × $20,000 = $5,000). Spend more and you don’t earn additional state credit, though all the other incentives described below still apply to the full system cost.

The credit is refundable: if your state tax bill in year one doesn’t fully absorb it, the unused portion carries forward for up to five years. File it on Form IT-255 with your New York State return.

For a mid-size residential system, plan on $5,000 back from the state. Verify current eligibility details and filing instructions on DSIRE (dsireusa.org) or confirm them with your installer before signing, since program rules can change.

NY-Sun upfront rebates: money off before you pay

The NY-Sun Incentive Program, administered by NYSERDA, pays installers an upfront rebate per watt of installed capacity. That rebate flows through to you as a lower purchase price — no separate application required. Your installer handles the paperwork and reduces the contract price accordingly.

The rebate amount varies by region and utility territory through a “megawatt block” structure: as available megawatts in each block fill, the incentive steps down. Early movers in a block capture better rates; later movers get less. NYSERDA designed it to reduce subsidies gradually as the solar market matures and installation costs fall on their own.

Get multiple installer quotes that break out the NY-Sun incentive as a distinct line item. The rate from last year may not apply today. Check current block status by utility territory at ny-sun.ny.gov or ask installers directly what block your territory is in before comparing proposals.

Sales-tax exemption and property-tax abatement

Sales-tax exemption. New York exempts residential solar energy systems from the state’s 4% sales tax, and most counties mirror the exemption. On a $25,000 system, that’s roughly $1,000 not paid at purchase. Your installer should automatically exclude solar equipment from the taxable portion of the invoice — confirm this before signing.

Property-tax abatement. Solar panels add resale value to your home, but New York law prevents localities from raising your property assessment based on that added value for the life of the system. In New York City specifically, a 15-year property-tax abatement applies to the cost of the solar installation itself, paid out over the abatement period. The NYC abatement has specific eligibility criteria tied to building type and ownership structure — verify directly with the NYC Department of Finance or through DSIRE if you’re in the five boroughs.

Outside New York City, the statewide property-tax exemption shields your assessment from rising because of the panels, protecting your long-term savings math and making the system more attractive to future buyers.

Net metering: retail-rate credits with a monthly CBC charge

New York runs retail-rate net metering: excess electricity your panels push onto the grid earns a credit at the same rate you pay when drawing power from the grid. At roughly 22.6¢/kWh, that’s a substantial credit per kilowatt-hour — well above the national average — with each exported unit worth the same as each unit consumed, the most favorable structure a state can offer.

Net-metering customers also pay a Customer Benefit Contribution (CBC), a monthly charge based on your system’s nameplate capacity in kilowatts. It functions as a grid-access fee scaled to system size, set by each utility and approved by the Public Service Commission, so the exact amount varies.

The CBC reduces your net savings. Build it into your payback math: ask your installer for annual savings net of the CBC, not just gross bill offset, before comparing payback periods across proposals.

Credits for excess production roll forward month to month at the retail rate. Any remaining balance at the end of an annual period is generally reconciled at a lower avoided-cost rate — so right-sizing your system to your actual annual consumption matters more than going oversized to bank surplus credits you may never fully redeem.

What happened to the federal 30% credit?

The federal residential solar tax credit under IRC §25D — which had been 30% with no dollar cap — expired on December 31, 2025 as part of the One Big Beautiful Budget Act (OBBBA). For systems purchased and installed in 2026, the federal credit is $0. Not 26%, not phased down — zero.

If an installer quotes a payback period or internal rate of return that includes a 30% federal credit, those numbers are wrong for a 2026 purchase. Ask directly: “Does your savings estimate include the §25D federal tax credit?” If the answer is yes, have them rerun the analysis without it. On a $25,000 system, that’s $7,500 the model was counting on that won’t arrive.

One nuance: if you lease solar panels or sign a power-purchase agreement (PPA) rather than buying a system outright, the company that owns the equipment may claim the commercial clean-energy credit under §48E, which operates under different rules. Leases and PPAs carry different economics regardless — you don’t own the system, so you can’t claim any tax credits directly — but the lessor’s ability to use §48E can influence PPA pricing. Ask your provider how their financing accounts for it.

For a detailed look at what systems cost before incentives, see how much do solar panels cost?.

Worked example: an 8 kW system in New York

All figures below are estimates — your actual costs and savings will vary based on installer pricing, your utility territory, your state tax situation, and your specific roof.

Line item	Amount
Gross system cost (8 kW installed)	$28,000
NY-Sun upfront rebate (est. $0.20/W)	−$1,600
Net cost after rebate	$26,400
NY State 25% tax credit (capped at $5,000)	−$5,000
Sales-tax exemption (est. ~4% on equipment)	−$1,056
Federal §25D credit (2026 purchase)	$0
Estimated net out-of-pocket	~$19,344

Annual production estimate: An 8 kW system in New York receives roughly 4.0 peak sun-hours per day on average. Gross annual production: 8 kW × 4.0 h × 365 days = 11,680 kWh. After applying a 0.80 system performance ratio — accounting for inverter losses, wiring resistance, temperature de-rating, soiling, and shading — estimated net production is approximately 9,344 kWh/year. Never use the raw gross figure for savings math; real-world output typically runs 15–20% below the theoretical maximum.

At 22.6¢/kWh under retail net metering, that’s roughly $2,112/year in estimated bill savings before subtracting the CBC. If your utility’s CBC runs $5–$10/month on an 8 kW system, deduct $60–$120/year, landing closer to $1,990–$2,050/year net.

Simple payback on approximately $19,344 out-of-pocket at roughly $2,020/year net savings works out to about 9–10 years. With a typical 25-year panel warranty, that leaves 15 or more years of reduced electricity costs after break-even. Use the solar savings calculator to model this against your actual consumption data and current utility rate.

Why New York’s electricity rate matters

New York’s average residential rate of around 22.6¢/kWh sits well above the national average of roughly 16¢. Every kilowatt-hour your panels produce is worth more on your bill here than in most other states. That rate premium partially compensates for New York’s modest sun resource — 22.6¢ credits per exported kWh go a long way toward closing the gap with sunnier states.

In the example above, the $5,000 state credit plus the NY-Sun rebate plus the sales-tax exemption together reduce out-of-pocket cost by nearly $7,700 on a $28,000 system — roughly 27% — before any federal help. New York electricity rates have climbed steadily over the past decade, and solar locks in a portion of your energy cost for the system’s lifetime, insulating you from future rate increases on the kilowatt-hours your panels cover.

Whether the package works for your home depends on roof orientation and shading, annual consumption, utility territory, and how much you pay in New York State income tax. The question are solar panels worth it? walks through how to evaluate each of those variables.

Verify before you sign

Incentive programs change faster than articles do. Before committing to a contract:

• Check your utility territory’s current NY-Sun block status and rebate rate at ny-sun.ny.gov or dsireusa.org.
• Confirm your utility’s exact CBC rate and net-metering terms directly with the utility or its website.
• Ask your installer for a written incentive breakdown showing each line item separately — and explicitly listing the federal §25D credit as $0 for a 2026 purchase.
• If you’re in New York City, verify property-tax abatement eligibility and current program rules with the NYC Department of Finance before relying on that figure in your payback projections.

The combination of the 25%/$5,000 state credit, NY-Sun upfront rebates, sales-tax exemption, property-tax protection, and retail-rate net metering makes New York one of the stronger solar incentive environments on the East Coast. The federal credit expiration changes the calculus compared to 2024 and 2025, and any installer proposal should reflect that. The remaining stack is still compelling — particularly with electricity rates where they are and continuing to climb.