NY State Solar Energy System Equipment Credit

Administered by: New York State Department of Taxation and Finance Status: Active in 2026 Verified: May 27, 2026 against NY State Solar Energy System Equipment Credit, NYS Tax Source quality: Primary

What it is

The NY State Solar Energy System Equipment Credit is a 25% income tax credit on what you spend installing solar at your primary residence in New York. It is capped at $5,000 per system. The credit comes off your state income tax for the year the system is placed in service. If the credit is bigger than your tax liability, the unused portion carries forward up to five years.

This is separate from NY-Sun, the state's upfront solar incentive, and stacks with it. NY-Sun pays you up front (usually through your installer) when the system goes in. The state tax credit comes later, when you file your state return. They are not the same program, and you can claim both for the same install.

The federal 30% Residential Clean Energy Credit (§25D) expired December 31, 2025. See Federal Residential Energy Credits: Program Ended. For systems placed in service in 2026 or later, this state credit is the only tax-credit lever you have on a New York residential solar install.

Who qualifies

You own or rent a primary residence in New York State where the system will be installed and used.
The system has to use solar radiation to produce heating, cooling, hot water, or electricity for residential purposes.
Purchased systems qualify directly. Leased systems and power purchase agreements (PPAs) also qualify, provided the written agreement runs at least 10 years.
Secondary homes and rental properties you don't live in do not qualify.
The credit is nonrefundable. If your state tax liability is less than the credit amount, the unused balance carries forward up to five years.

What you get

25% of your qualified solar equipment expenditures, capped at $5,000 per system.
Unused credit carries forward up to 5 years against future NY state income tax liability.
Claimed on Form IT-255 when you file your state income tax return.

These figures come directly from the New York State Department of Taxation and Finance.

How to apply

Install a qualifying solar system at your primary NY residence. Keep the itemized invoice and any utility or NYSERDA rebate documentation.
When you file your NY state income tax return for the year the system is placed in service, complete Form IT-255 (Claim for Solar Energy System Equipment) and attach it to your return.
Enter the credit on Form IT-201 (or IT-203 for part-year or nonresident filers) per the IT-255 instructions.
If the credit exceeds your tax liability, carry the unused balance forward on next year's return. Track the carryforward yourself; the state will not remind you.

How this stacks with other programs

With NY-Sun: The state tax credit is calculated on your out-of-pocket cost. Any NY-Sun rebate reduces the base before the 25% is applied. For most full-size residential systems, you still hit the $5,000 cap even after subtracting the NY-Sun rebate.
With utility solar rebates: Same logic. Subtract any utility rebate from the install cost before computing the credit.
With the federal credit: The federal Residential Clean Energy Credit (§25D) was 30% with no cap, but it expired December 31, 2025. For systems placed in service in 2026 or later, there is no federal credit to stack against the state credit.
With heat pump rebates: The state solar credit covers only solar equipment. A heat pump install runs separately through NYS Clean Heat.

What to ask your contractor

Will the system be placed in service this calendar year? "Placed in service" means installed and operational, not just contracted. This determines which tax year you claim the credit.
Can you provide an itemized invoice that separates solar equipment cost from any non-solar work on the same job? IT-255 applies only to the solar equipment portion.
For a PPA or lease, is the written agreement at least 10 years? Anything shorter disqualifies the credit.
What rebates or upfront incentives will reduce my out-of-pocket cost before I compute the 25%?

Common pitfalls

Wrong residence type. Vacation homes, second homes, and rental properties you don't live in do not qualify. The system has to be at your principal NY residence.
Lease under 10 years. A 7-year solar lease disqualifies you. The state's threshold is firm.
Forgetting the carryforward. The credit is not refundable. If you can't use the full credit in year one, you must track and claim the carryforward yourself for up to five years.
Double-counting NY-Sun. Including the NY-Sun rebate in your reported expenditures is a common audit trigger. The 25% is calculated on net cost after rebates.
Wrong form year. Form IT-255 is revised periodically. Use the current-year version from tax.ny.gov, not a downloaded PDF from a prior tax season.

Important dates

The credit has no published expiration date as of May 27, 2026. The tax.ny.gov page hosting the credit description was last updated December 16, 2019, but the underlying statute remains in effect and the form is still issued for current tax years. The credit is claimed on your state tax return for the year the system is placed in service. Carryforwards run five years.

Source

NY State Solar Energy System Equipment Credit, NYS Department of Taxation and Finance (retrieved May 27, 2026; page last updated December 16, 2019)
NYS Tax Forms — Income Tax Credits index (retrieved May 27, 2026; current Form IT-255 listed here)

NYSERB.com is an independent research site. It is not affiliated with the New York State Department of Taxation and Finance, the State of New York, or any utility. Verify all program details and incentive amounts directly with the NY State Department of Taxation and Finance before making any financial decision.

Verified against www.tax.ny.gov, www.tax.ny.gov on May 27, 2026.