Residential Solar Tax Credit
Administered by New York State Department of Taxation and Finance
You can claim a New York tax credit equal to 25% of your solar energy system costs (solar panels, solar water heat, or solar space heat) for your principal residence, up to a maximum of $5,000. If you buy the system outright, lease it, or enter a 10+ year power purchase agreement, you're eligible; any unused credit can be carried forward for up to five years. File Form IT-255 with your state tax return to claim it.
This credit makes solar installations more affordable for your residential customers in New York by reducing their net costs by 25% (capped at $5,000 total per system). The credit applies to direct purchases, leases of at least 10 years, and power purchase agreements, expanding your potential customer base; systems must comply with net-metering limits (25 kW for most homes, 50 kW for condominiums) and cannot be used for pool heating.
This non-refundable personal income tax credit—enacted in 1997 for PV and expanded to solar-thermal in 2005—reimburses 25% of qualified residential solar equipment costs up to $5,000 per household per tax year, with carryforward allowed for five years. The program covers owner-occupied and condominium systems; third-party leases and PPAs (10+ years) are eligible, and lease/PPA claimants can deduct up to 15 years of payments up to the $5,000 cap. It targets single-family and multifamily residential properties in New York State and does not restrict income levels, ensuring broad participation including low-income households.
Program details
- Program ID
- 80
- Last updated
- 4/14/2026
Eligibility
- Sectors
- residential multifamily residential low income residential
- Technologies
- solar water heat solar space heat solar photovoltaics
Program summary
Enacted in August 1997, this personal income tax credit originally applied to expenditures on solar-electric (PV) equipment used on residential property. The credit, equal to 25% percent of the cost of equipment and installation, was expanded in August 2005 to include solar-thermal equipment. The solar-thermal provisions apply to taxable years beginning on and after January 1, 2006. The credit is capped at $3,750 for solar-energy systems placed in service before September 1, 2006, and capped at $5,000 for solar-energy systems placed in service on or after September 1, 2006.
In August 2012 the credit was amended yet again (A.B. 34) to allow it to be claimed for systems installed under lease or power purchase agreements (PPAs) of at least 10 years in length. For third-party owned systems, the residential homeowner may claim a tax credit in the amount of lease or PPA payments made during the taxable year, for up to 15 years. The 25% incentive for such systems refers to aggregate amount of payments owed rather than the amount made during any single year. The maximum allowable tax credit amount of $5,000 applies to the total amount of credits claimed regardless of the ownership arrangement.
Solar-energy equipment is defined as "an arrangement or combination of components utilizing solar radiation, which, when installed in a residence, produces energy designed to provide heating, cooling, hot water or electricity." The credit may not be used for pool heating or other recreational applications. Any amount of credit that exceeds a taxpayer's liability in a given tax year may be carried forward for the five following taxable years. Any portion of the system cost provided by a non-taxable federal, state, or local grant is not eligible for this credit.
In general systems must comply with the 25 kW capacity limit on residential, net-metered solar-energy systems. However, in 2007 legislation was passed increasing the capacity limit to 50 kW for condominiums and cooperative housing associations. In addition, members of condominium management associations and tenant stockholders of cooperative housing associations are now allowed to claim a proportionate share of the total system expense towards the tax credit. These changes took effect beginning in the 2007 tax year, but as with other portions of the tax credit, they do not have an expiration date.
Interested participants can claim for the credit through filling out Form IT-255 (Claim for Solar Energy System Equipment), including specific instructions for the credit.
Contact & resources
- Additional resources
Please verify current program details with the administering agency before making any financial decisions.
