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. 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 before you sign anything

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 is that the rate isn’t fixed statewide. NY-Sun runs on a “megawatt block” system: as available capacity in each utility territory fills up, the incentive steps down for the next applicant. Sign early in a block and you capture a better rate; sign late and you get less. Get quotes that break out the NY-Sun figure as its own line item, and check current block status by territory at ny-sun.ny.gov before assuming last year’s number still applies.

Stage two: the sales-tax exemption trims the invoice

New York exempts residential solar systems from its 4% state sales tax, and most counties mirror that exemption locally. On a $25,000 system, that’s 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’s refundable: 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. For a mid-size system, plan on the full $5,000 coming back, just not necessarily in a single tax year. Confirm current filing details on DSIRE (dsireusa.org) or with your installer before you sign, since program specifics can shift.

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 29.45¢/kWh, 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 — expired December 31, 2025 under the One Big Beautiful Budget Act. For a 2026 purchase, it’s $0. 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, 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 automatic protections: property value and NYC’s abatement

Solar raises what your home is worth, but New York law prevents that added value from raising your property-tax assessment for as long as you own the system — protecting the long-term math and making the home more attractive to a future buyer. In New York City specifically, there’s an additional 15-year property-tax abatement applied to the installation cost itself, though eligibility depends on building type and ownership structure — verify with the NYC Department of Finance or DSIRE if you’re in the five boroughs before counting on it.

Running the full sequence: an 8 kW system

Here’s how the stack applies, stage by stage, to an 8 kW system priced at $28,000 before any incentive:

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	~$20,344

That’s roughly $7,700 shaved off a $28,000 system — about 27% — from the rebate, credit, and exemption combined, with no federal contribution at all.

For production: New York gets roughly 4.0 peak sun-hours a day on average. Gross annual output: 8 kW × 4.0 hours × 365 days = 11,680 kWh. Apply the standard 0.80 performance ratio — inverter losses, wiring resistance, temperature de-rating, soiling, shading — and net production comes out to roughly 9,344 kWh a year. Real-world output typically runs 15–20% below the theoretical maximum; don’t let a quote skip that step.

At 29.45¢/kWh under retail net metering, that’s about $2,752 a year in bill savings before the CBC. If your utility’s CBC runs $5–$10 a month on an 8 kW system, subtract $60–$120 a year, landing around $2,630–$2,690 net. Divide the $20,344 out-of-pocket figure by that net savings and simple payback works out to roughly 8 years — 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 29.45¢/kWh, New York’s average residential rate sits well above the national average of about 19¢ — 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, your utility territory’s current NY-Sun block, 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

Check your utility territory’s current NY-Sun block status and rebate rate at ny-sun.ny.gov or dsireusa.org. 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, sales tax, state credit, and net metering — into its own line, with the federal credit explicitly listed as $0. If you’re in NYC, verify the property-tax 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.