Local Option - Solar Sales Tax Exemption

December 05, 2023

Summary

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New York enacted legislation in July 2005 exempting the sale and installation of residential solar-energy systems from the state's sales and compensating use taxes. The exemption applies to solar-energy systems that utilize solar radiation to produce energy designed to provide heating, cooling, hot water and/or electricity. In 2012 the exemption was also extended to commercial solar energy systems, effective January 1, 2013. In 2015 the exemption was extended to solar systems that are owned by third party owners, who provide solar electricity to residential and commercial users. Both solar lease payments and the receipts of the sale of electricity by such systems are exempt from state sales and use tax.

The exemption does not apply to solar pool heating or other recreational applications. The laws also permit local governments (municipalities and counties) to grant an exemption from local sales taxes. If a city with a population of 1 million or more chooses to grant the local exemption, it must enact a specific resolution that appears in the state law. Local sales tax rates in New York range from 1.5% to more than 4% in addition to the general state sales tax rate of 4%.

The New York Department of Taxation and Finance publishes a variety of sales tax reports detailing local tax rates and exemptions, including those for solar energy equipment. The solar sales tax list (Publication 718-S) is updated frequently. The New York Department of Taxation and Finance has issued a small amount of additional guidance and instructions on how to claim the exemption in Publication TSB-M-05(11)S (residential), Publication TSB-M-12(14)S (commercial), and Publication TSB-M-15(5)S (PPAs).

Program Overview

Implementing Sector: State
Category: Financial Incentive
State: New York
Incentive Type: Sales Tax Incentive
Web Site:
Administrator:
Start Date: Residential: 09/01/2005 (state authorization, resultant local exemptions may differ)<br>Commercial: 01/01/2013 (state authorization, resultant local exemptions may differ)
Eligible Renewable/Other Technologies:
  • Solar - Passive
  • Solar Water Heat
  • Solar Space Heat
  • Solar Photovoltaics
Incentive Amount: Upon local authorization, 100% exemption from local sales tax

Authorities

Name: NYCL Tax, Article 28 § 1115(ee) & 1115(ii)
Date Enacted: 07/26/2005
Effective Date: 09/01/2005
Name: S.B. 3203 (2012)
Date Enacted: 08/17/2012
Effective Date: 01/01/2013
Name: A.B. 3009B (2015)
Date Enacted: 04/13/2015

Contact

Name: Taxpayer Assistance - Sales Tax Information Center
Organization: New York State Department of Taxation and Fin
Address: W.A. Harriman Campus
Albany NY 12227
Phone: (518) 485-2889

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.