A push to increase the maximum state income tax credit for residential solar installations, and make energy storage and more people eligible for the tax credit is in final negotiations with New York Gov. Hochul and state lawmakers.
Since 2006, New York has offered a solar tax credit capped at $5,000 per household for solar installations. The credit is sized at 25% of the system cost, or $5,000, whichever is less.
Nearly two decades later, “there’s a number of fixes that need to occur with this tax credit,” T.R. Ludwig told pv magazine USA. Ludwig has been on NYSEIA’s board for more than seven years, and CEO and co-founder of both Brooklyn SolarWorks and Brooklyn Solar Canopy.
SB S3596B doubles the cap to $10,000, allowing customers to offset state income taxes with a credit and retain the 25% installed system cost. The bill also strives to remove a 50 kW limit on how much co-ops and condos can use the tax credit towards, a cap other residential buildings are not subject to.
NYSEIA also proposed to apply the tax credit to energy storage. If successful, New York would become the first state to do so. New York is one of the few states that offer tax credits on top of the federal credits for home solar installations.
(See also: NYC solar mecca created by policies and incentives & New York City’s solar industry expects growth amidst federal uncertainty)
NYSEIA is also proposing a refundability component. “These tax credits are not quite as useful for folks that have lower tax bills,” Ludwig said, pointing to people with fixed incomes, low incomes or are living on untaxable pensions. “Instead of trying to use a tax credit, they would get a check,” which he said is “much more usable than a tax credit that they couldn’t use against their taxable income in the future.”
“It’s just a fair way to do this,” he said. “We shouldn’t have to have our fellow residents make a certain amount of money to be able to take advantage of these tax credits.”
Ludwig said there is precedent in New York, pointing to other tax credits in the state that allow people with incomes below a certain threshold to receive grants for building upgrades that require upfront costs instead of receiving a tax credit.
Most condos and co-ops in cities use larger systems, such as 200 kW, which “still isn’t nearly enough electricity to offset the entire building plus all of the units,” he said.
“It’s sort of a fairness question,” he added, “like, why? Why should they be capped on the amount of solar that their building gets when a residential customer doesn’t have quite the same cap?”
Ludwig said the 50 kW cap “is just sort of an arbitrary number that got thrown into the original language and hasn’t been changed since.”
Despite industry support and public rallying around it, SB S3596B has yet to advance to the Senate floor for a vote.
The primary pushback is because the change is a budgetary item, he said. New York’s deficit in previous years made it very challenging to convince the state to spend more money, Ludwig said. However, “this year, it appeared that we were skating towards the surplus with all the federal changes and reduction in federal funding for various programs,” he said. “It does kind of call into question that surplus, but it’s still on the table.”
Updating the tax credits would cost an estimated $30 million, according to NYSEIA’s estimates.
“When you look at the overall impacts it could deliver, it’s actually quite a small investment that we think could make a huge difference,” Ludwig said.
According to NYSEIA’s fiscal analysis reviewed by pv magazine USA, the proposal could:
- have an incremental fiscal impact of $38M in year one (cash basis);
- result in an estimated 2,231 additional residential solar installations in the first year, driving an $84 million annual investment in local clean energy;
- create an estimated 620 full-time, long-term jobs, providing an estimated $47 million in annual wages and benefits;
- provide homeowners, many of whom will be low-income families or seniors, with $165 million in lifetime electricity bill savings; and
- decrease New York’s carbon emissions by 6,651 metric tons each year.
Ludwig said NYSEIA has met with Gov. Hochul about their proposed changes many times. “She’s indicated that she is supportive,” he said, “but she did not put it in the budget for her executive budget this year.”
New York has a “One-House Budget” that the Senate and Assembly agree upon before going into negotiations with the governor. Ludwig said the Senate and Assembly agreed the proposed tax credit changes should be in the state’s 2025–2026 budget, but whether the final budget includes these changes depends on their negotiations with the governor. The budget was supposed to be finalized by April 1, “but in classic fashion, we’re running into overtime,” he said.
“It’s pretty crazy what goes on up in Albany around budget season,” he said. “There’s just all sorts of priorities, and depending on where the winds are blowing at any given time, you might be talking about the right stuff or the wrong stuff,” he added, “and over the past several years, we’ve just not been able to breakthrough and get people’s attention on this.”
“So far we haven’t been successful,” he said, “but we feel this year we might be able to get it done.”
