If you live in New York and are thinking about going solar, 2022 is an excellent year for you to install solar panels. But don’t wait, government financial incentives are decreasing.
New Yorkers pay an average of 19 cents per kWh, one of the highest rates in the continental U.S. The state’s power usage doesn’t just result in financial cost. The burning of fossil fuels to meet electrical needs puts New York state in the top 10 list of carbon dioxide emissions.
Considering the environmental toll and the high price New Yorkers are paying for electricity, this is a great time to make the switch to clean solar power. Read on to learn about money-saving incentives that New York state offers its residents!
Federal Investment Tax Credit
The most significant solar incentive available for New Yorkers in 2022 is the federal investment tax credit (ITC). The ITC entitles you to a tax credit equal to 26 percent or your system’s value.
If your system costs $22,000, you could take a tax credit of $6,600 on your federal taxes. But if you want to cash in on this great discount, you should do it soon – the ITC declines to 22 percent after 2022. After 2023, the ITC will no longer be available to homeowners.
New York Residential Solar Tax Credit
A similar tax credit is available at the state level for systems up to 25 kilowatts in capacity. New York’s residential solar tax credit is equal to $5,000 or 25 percent of the cost of your solar system, whichever is less.
For instance, if your system costs $15,000, you’d be able to take a $3,750 tax credit on your state taxes. If it cost $21,000, however, you’d only be able to earn a $5,000 tax credit, since that’s the lesser of the two possible values.
To be eligible for the New York State Solar Tax Credit, you must:
- Be a New York State resident
- Install a solar energy system on your primary New York State residence
- Have a New York State tax liability
Unlike some states, you may be eligible for the Solar Tax Credit in New York even if you do not own your panels. If you have a lease or power purchase agreement (PPA) and the term of your contract is at least ten years, then you too are eligible for these savings!
New York Megawatt Incentives
Another important state-level program is the Megawatt Block program. This awards funding to people living in three separate zones based on the number of solar panels already installed there.
New York’s Megawatt Block incentive offers funding on a per-watt basis to homeowners who install solar energy systems. As the solar capacity of a particular region rises, the amount that homeowners are eligible to receive declines until the incentive is phased out altogether.
In one of the three zones – the Long Island region – the program has already closed, at least for residential applicants. Megawatt Block incentives in the remaining two zones hover around 30 cents per watt for residential buildings. That means that if you install a 4,000-watt system, you will receive a grant of $1,200. Given the rapidly declining value of these grants, 2022 is certainly the year to take advantage of this program by installing your home solar system.
Like many other states, New York also offers net metering. Net metering is an arrangement in which the excess energy your home solar system produces feeds back into the grid.
Suppose, for instance, you’re out at work for most of the day, when the sun is shining down on your solar panels. Under normal conditions, with all appliances idling, your system will likely produce more energy than your home requires, and that excess energy will go to waste. But if your home is wired for net metering, any excess power your solar panels produce will be sent back into the grid so that it can be used by households and businesses that need it.
That’s not only great for the environment but also your wallet, since your local electric utility will credit you based on the amount of energy you contribute to the grid.
For instance, if you produce $40 worth of energy and consume $50 worth of energy, your monthly bill will total just $10. And if you produce more than you consume, you’ll receive a credit on the following month’s bill equal to the difference.
Other New York Solar Rebates and Incentives
Reforming the Energy Vision (REV) Cooperative Plan
A suite of initiatives developed by Reforming the Energy Vision (REV) may also help you go solar. The REV is a cooperative plan between the New York Public Service Commission, the New York Energy Research and Development Authority, the New York Power Authority, and the Long Island Power Authority. It aims to modernize New York’s energy infrastructure and help the state meet its clean energy goals. Part of the project involves providing savings for low- and middle-income households that install solar systems.
NY-Sun is an initiative started by the New York State Energy Research and Development Authority (NYSERDA) to help increase energy efficiency for New Yorkers. This program helps New Yorkers to drive down their energy costs while making the switch to solar energy. The NY-Sun website directs New Yorkers to local incentives for residences and businesses, explains community solar, and provides resources to help the consumer make an educated decision.
Another way NY-Sun helps is by offering two types of loans to N.Y. residents looking to get started with solar energy. Residential On-Bill Recovery allows residents to add the solar expenses, including installation costs, as part of their monthly utility bill, to make the investment more manageable. Smart Energy loans, on the other hand, allow you to repay the loan directly to NYSERDA’s loan servicer.
Such loans are available in amounts from $1500-$25,000, with a variety of five, ten or fifteen-year repayment plans.
NY Solar Sales Tax Exemption
New York state enacted legislation that would exempt the sale and installation costs of residential solar systems from the state sales tax. This exemption would allow systems that cool, heat and/or provide electricity to residences to benefit from tax exemption on those costs. To benefit from this status, the resident would need to submit a sales tax exemption certificate. More information can be found here.
NYC Property Tax Abatement
The Solar Electric Generating System (SEGS) Tax Abatement encourages NYC homeowners to install solar systems by offering a four-year tax abatement of 5% per year of the installed system’s cost, for a total of up to 20%. The abatement is spread equally over four years, and may not exceed your property tax liability for any given year. Savings are capped at $62,500 per year, or $250,000 total.
Eligible costs include the cost of equipment, the cost of designing the solar system, and installation labor. The tax abatement has been designed to help offset the costs of meeting the NYC Department of Building’s codes. To take advantage of this incentive, you or your solar installer will need to hire a New York State-registered architect or professional engineer to file the necessary paperwork with the NYC Department of Buildings. This form should be completed in order to benefit from these savings.
If you are interested in taking advantage of the tax abatement, act fast! The program has been successful for more than a decade but is slated to end January 1, 2021. This savings is only available for a short time!
NYS Historic Homeownership Rehabilitation Tax Credit
If you either rehabilitate a qualified historic home in New York State or purchase a qualified historic home in New York State, then you may be entitled to claim the Historic Homeownership Rehabilitation Tax Credit. This credit reduces the cost of an improvement on such homes by up to 20% (up to $50,000 in credits), including the installation of a solar power system.
To find out more about the financial incentives available to you in New York in 2022, talk to your solar installer. They’ll be able to provide more specifics about the incentives in your area and how you can apply for them.
People Also Ask
Yes, NYSERDA grants do in fact count as taxable income. Please consult with a tax professional with further questions.
The average cost for a 6 kilowatt (kW) solar installation in New York is $17,280 and $12,787 after the federal tax credit. The average cost per watt of installing solar panels in NY is $2.88 per watt.
These numbers are just estimates, and solar systems are highly customizable to your finances and power needs. Solar panel installation cost varies based on the size of the home, watt usage, and also by county.
Your solar-powered home can benefit from increased value, but only if you own your panels. Leasing the panels means that you are renting them from a third party, so they wouldn’t be considered when assessing your home’s value.
If you own the system, then good news! Homes that are solar-powered homes benefit from the increased value. In fact, according to Zillow’s recent study, solar-powered New York homes are selling for an average of 5.4% more than comparable homes without a solar system! Going solar is an investment for a greener earth and savings on electric bills, and it can also be an investment in your home’s property value.
As we discussed above, the New York City Property Tax Abatement encourages NYC building owners to install solar systems by offering a four-year tax abatement of 5% per year of the installed cost of the system’s installation cost, for a total of up to 20%. In addition to this savings, installing solar panels on your home remains exempt from property taxes for the first fifteen years. Combine that with the savings on your annual electric bill, and your investment will only increase in financial gain!