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Tax credit · New York Department of Taxation and Finance · New York

New York State Solar Energy System Equipment Credit

25% of system cost up to $5,000

The New York State Solar Energy System Equipment Credit is a 25% state tax credit on residential solar PV system costs, capped at $5,000 per residence. Filed via Form IT-255 with your New York state tax return. Carryforward up to 5 years if the credit exceeds your state tax liability. Unlike the federal 25D credit, the state credit is calculated on the pre-rebate full system cost (not reduced by NY-Sun upfront rebate), making it independently valuable. Combined with the federal 25D and NY-Sun upfront, New York homeowners often see 55%+ stacked solar incentive coverage.

Eligibility

Who qualifies?

New York State resident homeowner. Principal residence or vacation home. Renters and pure rental properties do not qualify.

System ownership requirement?

You must own the system outright (cash or solar loan). Leased solar and PPA do not qualify — leasing company captures the credit instead.

Cap details?

25% of cost up to $5,000 — meaning the cap applies at $20,000 system cost. Larger systems do not increase the credit beyond $5,000.

How to apply for NY State Solar Credit

  1. Confirm eligibility and ownership

    NY State resident, owner of system, NY State principal or vacation residence.

  2. Document total cost

    Pre-rebate cost — including equipment, install labor, permits, interconnection. NY-Sun rebates do NOT reduce the basis for state credit calculation (unlike federal).

  3. Calculate 25%

    25% of total cost, capped at $5,000.

  4. File Form IT-255

    Attach to your NY State income tax return (Form IT-201).

  5. Carry forward unused credit

    If the credit exceeds your NY State tax liability, carry forward up to 5 years.

Stacking with other programs

Stacks with federal 25D (30% on post-NY-Sun basis), NY-Sun MW Block (upfront rebate), NYC Real Property Tax Abatement (NYC only — up to 30% over 4 years), property tax exemption RPTL §487, and sales tax exemption. The NY State Solar Credit is independent of all rebates — the 25% applies to full cost.

Frequently asked questions

Does the state credit reduce the federal credit? +
No. State tax credits do not reduce federal cost basis. State and federal credits operate independently.
Does NY-Sun reduce the state credit basis? +
No — the NY State Solar Credit is calculated on full pre-rebate system cost. This is unusual; most state credits use post-rebate basis.
5-year carryforward — how does it work? +
Form IT-255 calculates carryforward annually. Excess credit rolls to next NY tax year for up to 5 years. If unused after 5 years, it is forfeited.
Can I claim 25% on a $30,000 system? +
Capped at $5,000. 25% × $30,000 = $7,500, but the cap reduces this to $5,000. Larger systems get the same maximum credit.

Official program page: https://www.tax.ny.gov/pit/credits/solar_energy_system_equipment_credit.htm

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