New York solar incentives & net metering (2026)

New York’s solar incentives don’t arrive as one number — they arrive in a sequence, each one landing at a different stage of owning the system. For income-qualified households, the NY-Sun rebate lowers your contract price before you sign. The sales-tax exemption trims the invoice at purchase. The 25% state credit, capped at $5,000, shows up the following spring on your tax return. And retail-rate net metering pays you back every month after that, for as long as you own the panels. The federal credit isn’t part of this sequence anymore — IRC §25D expired December 31, 2025, so it contributes exactly $0 to a 2026 purchase. What’s left is still one of the stronger stacks in the country; you just have to track it stage by stage.

Stage one: NY-Sun shrinks the price, if you’re income-qualified

NYSERDA’s NY-Sun Incentive Program pays your installer an upfront rebate per watt of installed capacity, and that rebate shows up as a lower number on your contract — you don’t file for it separately, and there’s no reimbursement to wait on.

The catch in 2026 is who can still get it. NY-Sun runs on a “megawatt block” system, and the standard residential blocks have now filled in every region: Long Island closed in 2016, Con Edison territory in May 2025, and upstate in December 2025. What remains is the Affordable Solar incentive for households at or below 80% of area median income — about $0.80/W upstate and in Con Edison territory, and $0.40/W on Long Island. On October 14, 2026, NYSERDA announced new state funding that includes about $20 million for low- and moderate-income rooftop solar, but it has not announced a reopening of standard-income residential blocks. If you think you qualify, ask your installer to show the NY-Sun figure as its own line item, and check block status at ny-sun.ny.gov.

Stage two: the sales-tax exemption trims the invoice

New York exempts residential solar systems from its 4% state sales tax, and many (not all) counties and cities have adopted the matching local exemption. On a $25,000 system, the state portion alone is roughly $1,000 not paid at the register. Your installer should exclude solar equipment from the taxable portion of your invoice automatically — confirm it’s actually reflected before you sign.

Stage three: the 25%/$5,000 state credit lands at tax time

New York’s Solar Energy System Equipment Credit is where the real dollar figure sits. It’s 25% of your system’s purchase and installation cost, capped at $5,000 — you hit that ceiling at a $20,000 system cost, and anything spent beyond that doesn’t generate additional state credit, though every other incentive here still applies to the full price.

It isn’t refundable, but if your state tax liability in year one doesn’t absorb the full amount, the remainder carries forward for up to five years. File it on Form IT-255 with your state return. If you owe enough New York income tax over that window, plan on the full $5,000 coming back, just not necessarily in a single tax year. Unlike the old federal credit, New York’s credit also covers leased systems and power purchase agreements of at least ten years. Confirm current filing details with the Department of Taxation and Finance or a tax professional before you sign.

Stage four: net metering pays you every month after that

Once the system is running, New York’s retail-rate net metering credits every exported kilowatt-hour at the same rate you’d pay to draw it — roughly 28.39¢/kWh (EIA, 12-month average through July 2026), well above the national average, and one of the more generous structures a state offers.

There’s a wrinkle: net-metering customers also pay a Customer Benefit Contribution (CBC), a monthly charge scaled to your system’s nameplate capacity in kilowatts. It’s a grid-access fee, set by each utility and approved by the Public Service Commission, so the exact amount depends on where you live. It trims your net savings without eliminating them — build it into your math by asking installers for savings figures net of the CBC, not just gross bill offset. Credits for unused production roll forward monthly at the retail rate; whatever’s left at year’s end typically settles at a lower avoided-cost rate, which is another reason to size your system to your actual usage rather than deliberately overbuilding.

What’s missing from the sequence: the federal credit

The federal residential credit under IRC §25D — 30%, uncapped — ended for systems completed after December 31, 2025, under the One Big Beautiful Bill Act. For a system installed in 2026, it’s $0, even if you paid for it in 2025. Not phased down, not partial — gone. If a proposal in front of you still nets out a 30% federal credit, ask directly: “Does this number include §25D?” On a $25,000 system, that credit would have been $7,500 — money the old math assumed and the new math can’t.

One asterisk: lease and PPA customers don’t own the system, so they were never claiming §25D directly anyway. The company that owns the equipment may still access a commercial credit under §48E (if its project began construction before July 4, 2026 or is placed in service by the end of 2027), which can influence how they price your monthly payment — worth asking about, but it’s their tax situation, not a substitute for the credit you’d have owned. See how much do solar panels cost? for what systems run before any of these incentives apply.

Two more protections: property value and NYC’s abatement

Solar raises what your home is worth, but Real Property Tax Law §487 keeps that added value off your property-tax assessment for 15 years, for systems built before January 1, 2030. It isn’t universal: towns, counties, and school districts can opt out, so ask your assessor whether yours does before you count on it. In New York City specifically, there’s an additional abatement on the installation cost itself — 30% of eligible costs, up to $250,000, taken in equal parts over four years, for systems placed in service from January 1, 2024 through December 31, 2034. Eligibility depends on the property, so verify with the NYC Department of Finance if you’re in the five boroughs.

Running the full sequence: an 8 kW system

Here’s how the stack applies, stage by stage, to an 8 kW system priced at $25,600 (about $3.20/W, estimate) for a household that doesn’t qualify for NY-Sun:

That’s $5,000 off the price from the state credit, plus roughly $1,000 of state sales tax you never pay, with no federal contribution at all. An income-qualified upstate household would also get about $6,400 from NY-Sun’s $0.80/W Affordable Solar incentive (estimate).

For production: New York gets roughly 3.8 peak sun-hours a day on average. Gross annual output: 8 kW × 3.8 hours × 365 days = 11,096 kWh. Apply the standard 0.80 performance ratio — inverter losses, wiring resistance, temperature de-rating, soiling, shading — and net production comes out to roughly 8,877 kWh a year. Real-world output typically runs 15–20% below the theoretical maximum; don’t let a quote skip that step.

At 28.39¢/kWh under retail net metering, that’s about $2,520 a year in bill savings before the CBC (estimate). If your utility’s CBC runs $5–$10 a month on an 8 kW system, subtract $60–$120 a year, landing around $2,400–$2,460 net. Divide the $20,600 out-of-pocket figure by that net savings and simple payback works out to roughly 8.5 years (estimate) — with 15-plus years of a typical 25-year panel warranty left afterward to run at reduced cost. Plug in your own address, usage, and rate with the solar savings calculator to see how the sequence plays out for your specific numbers.

Why New York’s rate makes the sequence worth tracking

At roughly 28.39¢/kWh, New York’s average residential rate sits well above the national average of about 18¢ — every kWh your panels produce is worth more here than in most of the country, which partly offsets a more modest sun resource than states like Arizona or Florida get. Rates have climbed steadily over the past decade, and locking in a chunk of your usage at $0 marginal cost matters more the longer that trend continues.

Whether the full sequence works for your specific home depends on roof orientation, annual consumption, whether you qualify for NY-Sun’s income-based incentive, whether your town opts out of the §487 exemption, and how much state income tax you actually owe to absorb the $5,000 credit. Are solar panels worth it? breaks down how those variables interact.

Confirming each stage before you sign

If you may be income-qualified, check NY-Sun Affordable Solar eligibility and block status at ny-sun.ny.gov. Confirm your exact CBC rate and net-metering terms with your utility directly. Ask your installer for a written breakdown that separates each incentive — NY-Sun (if any), sales tax, state credit, and net metering — into its own line, with the federal credit explicitly listed as $0. Ask your assessor whether your town, county, and school district honor the §487 exemption, and if you’re in NYC, verify the abatement’s eligibility rules with the Department of Finance before building it into your projections.

Four stages, four different mechanisms, one system — that’s what makes New York’s 2026 stack worth the extra step of tracking it in order rather than treating it as a single discount percentage.