NYS Residents Get Solar Equipment State Tax Credit, Federal Income Tax Credit, and Other Incentives
- Jun 29, 2023
- John Clausen
Federal and State Tax Savings Can Be as Much as 55% Of the Cost
Income Tax Credit
New York State resident taxpayers are allowed an income tax credit equal to 25% of “qualified solar energy equipment expenditures,” with a lifetime cap on the credit of $5,000. (The cap is reached when a taxpayer spends $20,000 on solar energy system equipment that is purchased or leased. Also, taxpayers who enter into written agreements that span at least ten years for the purchase of power generated by solar energy system equipment not owned by them qualify for a credit).
Taxpayers purchasing a newly constructed home that serves as their primary residence upon completion of construction, and which comes with solar panels installed, should qualify for the credit.
Unlike many other types of individual income tax credits, there is no “phase-out” of the solar energy equipment credit based on taxpayers’ incomes. Therefore, even taxpayers with high incomes can qualify for the credit. To claim the credit, taxpayers must complete Form IT-255 and attach it to their tax return.
Taxpayers may also qualify for a federal solar investment tax credit of 30% of the cost of their solar equipment, which reduces a taxpayer’s federal income tax liability. When combined these credits can reduce the after-tax cost of an investment in solar equipment by as much as 55%!
Sales Tax Exemption
Purchases of solar equipment are exempt from New York State sales tax. A properly completed “Exempt Use Certificate” Form ST-121 must be provided to the vendor or contractor at the time of purchase or installation.
Net Metering Incentives:
“Net metering” is an electric billing tool that uses the electric “grid” to track excess energy produced by a residence’s solar panel system. Electric utility customers get credits against their bill, usually in the winter, for the excess energy that was produced by their solar panels during the sunnier months. More information about the state’s top utility net metering programs can be found on the utility company websites at these links:
What's on Your Mind?
John Clausen is a Tax Partner in the firm's State and Local Tax Group. With 30-years of experience in public accounting, John’s expertise focuses on state and local income taxation.
Start a conversation with John
Explore More Insights
It's Not You, It's Your Software | Embracing the Future as a Digital CFORead More
Receive the latest business insights, analysis, and perspectives from EisnerAmper professionals.