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  • Writer's pictureKerry Lipp

The 25% NY State Tax Credit for Solar



This is a personal income tax credit for NY state residents who have installed solar equipment at their primary residence. Taxpayers are allowed to take a credit of 25% of the cost of the solar installation after rebates and grants. The maximum credit allowed is $5,000. If your tax liability amount is less than $5,000, the excess credit can be carried forward for as long as five years. You must fill out form IT-255.


From the instructions for form IT-255: Tax Law section 606(g-1) provides for the solar energy system equipment credit. The credit is allowed for certain solar energy system equipment expenditures. To qualify for the credit, the solar energy system must use solar radiation to produce energy for heating, cooling, hot water, or electricity for residential use. The equipment must be installed and used at your principal residence in New York State.


Eligible equipment must be new and includes solar photovoltaics, and solar thermal for water heating and space heating. There is no minimum eligible system size. The maximum eligible system size is 25kW but for solar systems owned by condominium or cooperative housing associations the maximum size is 50kW.


This tax credit is also allowed for systems installed under lease or PPA (power purchase agreements).


If the equipment is solar photovoltaic (electricity producing) then it must be connected to the utility grid and net-metered (AKA grid-tied or interconnected) to qualify for the credit. This means that off-grid systems do not qualify.


Example:

System size: 6kW

Total cost: $18,000 ($3 per installed watt)

After NYSEDRA rebate: $15,900 (18000 - (6000 x 0.35)

Amount eligible for NY state tax credit: $15,900

Amount of NY state credit: $3,975 (15900 x 0.25)


Any tax credits should be discussed with your tax professional.









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