2025 Federal Solar Tax Credit & New York Incentives: What You Need to Know

The Federal Residential Solar Tax Credit andCommercial Solar Tax Credit (ITC) have played a major role in making solar power more affordable. With the 30% federal tax credit still available through 2032 and New York’s additional State Income Tax incentive, now is the best time to invest in solar. However, with potential policy changes on the horizon, acting sooner can help you. Here’s what homeowners and businesses on Long Island need to know.

Federal Solar Tax Credits: Still 30%, But Not Forever

The Federal solar tax credits allow homeowners and businesses to claim 30% of their total solar installation costs as a tax credit. This applies to both solar panels and battery storage systems—even if the battery charges from the grid.

• The Federal Tax Credits are slated to remain at 30% through 2032, then drop to 26% in 2033, 22% in 2034, and expire in 2035.

• Businesses and LLCs may qualify for additional bonus credits, increasing their ITC beyond 30% if they use U.S.-made materials, use Union Labor or build in designated energy communities…

• In addition, businesses and LLCs may currently qualify for an Accelerated Depreciation (MACRS) income tax deduction of 85% of installation cost over a 5-year schedule.

• The credits roll over to future tax years if you don’t use the full amount in one year.

By installing solar in 2024 or 2025, you guarantee the highest available credit before any reductions occur.

New York State Solar Incentives: Added Savings for Homeowners

In addition to the federal credit, New York offers several financial benefits to make solar more affordable:

• NY State Income Tax Credit – Homeowners can claim 25% of their system cost (up to $5,000) as a credit on state taxes.

• Property Tax Exemption – Solar increases property value, but New York exempts the added value from property taxes for 15 years.in most areas

• Sales Tax Exemption – No state sales tax on residential solar equipment, saving approximately 4% on total costs.

• NY-Sun Rebates – These upfront incentives have been exhausted for Long Island residential projects, but are still available for income-qualified homeowners.

• Net Metering – Excess solar power sent to the grid earns bill credits at full retail rates, helping reduce electricity costs over time.

Long Island–Specific Incentives

• PSEG Long Island Battery Storage Rewards – Homeowners who install battery storage alongside solar can receive $250 per kWh in rebates, significantly reducing battery costs.

• Dynamic Load Management (DLM) Incentives – Homeowners with battery storage can earn additional rewards by discharging power during peak demand times, helping stabilize the grid while saving money.

Why Now Is the Best Time to Go Solar

While the 30% federal credit horizon extends through 2032, state incentives and rebates are running out faster than expected. In the past, rebate programs like NY-Sun’s Megawatt Block Incentive have been depleted for Long Island, and further reductions could be coming. By installing solar in 2024 or early 2025, you can:

• Secure the full 30% federal credit before reductions

• Maximize New York’s tax credits and exemptions

• Lock in net metering savings before potential policy changes

• Take advantage of Long Island–specific battery storage incentives

• Reduce your electricity costs immediately

Get Started Before Incentives Change

New York’s electricity rates remain some of the highest and fastest-riding in the country, making solar one of the smartest investments for homeowners and businesses. By acting now, you can lock in the best incentives available, avoid future reductions, and start saving on energy costs immediately. Purchasing solar power is also a great hedge against inflation in energy prices.

Contact us today!