HomeIf you were quoted for solar in 2024 or early 2025 and put the decision off, the numbers on that proposal are no longer correct. The single largest incentive in it is gone.
What changed on January 1, 2026
Section 25D of the federal tax code — the residential clean energy credit, which returned 30% of a solar system’s cost to the homeowner who paid for it — no longer applies to systems placed in service after December 31, 2025. The One Big Beautiful Bill Act, signed in July 2025, ended it roughly nine years earlier than the phase-out schedule the Inflation Reduction Act had put in place.
Two details matter more than the headline:
- It turns on “placed in service,” not the contract date. A signed contract, a paid deposit, or an ordered pallet of panels in December 2025 does not preserve the credit. The system had to be installed and operational by December 31, 2025.
- If your system was switched on in 2025, you have not lost anything. You claim it on your 2025 return using IRS Form 5695, in the normal way, at the full 30%. Nothing about the repeal is retroactive.
Everything below is about systems going in now.
What a New York City owner still gets in 2026
This is the part that gets lost in the national coverage. Three of the four incentives that made solar work in NYC were never federal, and none of them changed.
New York State: 25% of system cost, capped at $5,000
The State’s Solar Energy System Equipment Credit is still in place, still 25% of the system cost, still capped at $5,000 per residence. It is a credit against your New York State income tax, and if your liability in the installation year is too small to absorb it, the unused portion carries forward for up to five years.
For a typical residential system in the city, the $5,000 cap binds — meaning most homeowners get the full $5,000 rather than a true 25%. Worth knowing when you compare quotes: on a larger system, the state credit is a flat number, not a percentage that scales.
There is pending legislation in Albany that would raise this to 40% with a $10,000 cap. It has not been enacted. Do not plan around it, and be skeptical of any installer who quotes you as though it has passed.
New York City: the 30% property tax abatement
This is now the largest single incentive available to a NYC property owner, and it is the one most people have never heard of. The Solar Electric Generating System abatement reduces your property tax bill by 30% of the eligible system cost, spread over four years at 7.5% per year.
The mechanics worth knowing:
- It applies to tax class 1, 2, and 4 properties — so single- and two-family homes, co-ops and condos, and commercial buildings.
- It is capped at $62,500 per year and $250,000 in total, which only matters on large commercial arrays.
- It cannot exceed your property tax bill in a given year. If your annual bill is smaller than the 7.5% installment, you lose the difference for that year. This is the constraint that catches owners of low-assessed properties, and it is worth checking before you size a system.
- Systems must be placed in service between January 1, 2024 and January 1, 2035.
- The application is a filing with the Department of Finance, and it is deadline-driven — for a given tax year, the application has to be in by March 15.
Because it arrives as four annual reductions to a tax bill rather than a lump sum on a tax return, it is easy to undervalue. It is not smaller than the old federal credit; it is just slower.
NYSERDA NY-Sun
NY-Sun is an incentive paid per watt of installed capacity, and in practice you never touch it — it is claimed by the installer and shows up as a reduction in the contract price before you sign. The rate steps down in blocks as regional capacity fills, which is why a quote from eighteen months ago may show a different NY-Sun line than a quote today. Ask what block the current rate reflects.
Con Edison net metering
Not an incentive exactly, but it is where the ongoing savings come from. Residential systems interconnecting in Con Edison territory today still receive one-to-one credit at the full retail rate for every kilowatt-hour exported, with credits rolling forward month to month. Customers going solar now are locked into that arrangement for twenty years, which is a meaningful hedge given where Con Edison rates have gone.
The one place a 30% federal credit still exists
Section 48E — the business-side clean electricity credit — was not repealed on the same schedule, and it runs through the end of 2027. It goes to whoever owns the system.
Because if a third party owns the system, that 30% is still being claimed – and there are now structures that pass it to you anyway.
The prepaid lease
This has become the mainstream answer to the 25D repeal, and it is worth understanding properly. In a prepaid lease, a financing entity owns the system during an initial term and claims the 30% credit under Section 48E. That credit is applied as an upfront discount to what you pay. After the initial term – commonly around year five or six – ownership of the system transfers to you.
The practical outcome is that you capture roughly the same 30% a cash buyer got in 2025, and you still end up owning the system. A cash buyer in 2026 cannot access that money at all. That is not a technicality, and it is the single biggest reason the financing conversation changed this year.
The standard lease and PPA
In a conventional lease or power purchase agreement, the third party keeps ownership and the 48E value reaches you as a lower monthly payment or a lower per-kilowatt-hour rate. Genuinely nothing down. For a household with little New York State tax liability to absorb the state credit against, this is often the better arithmetic rather than the lesser option.
And the City abatement still comes to you
One correction to something widely misunderstood in New York City: the property tax abatement is available on a third-party-owned system. The building owner receives the abatement even where a financing company owns the equipment. You do not forfeit the 30% City abatement by not buying the system outright.
What actually deserves scrutiny in a third-party arrangement is narrower than “do I own it”: whether there is an escalator on the payment and at what rate, the term length, what the buyout costs and when it is available, and how the agreement is assigned if you sell the house. Those are the real variables. Ownership by itself is no longer the deciding one.
What this actually does to payback
Rather than quote you a payback period that depends on assumptions you cannot see, here is the arithmetic to run on any 2026 quote:
- Start with the contract price after the NY-Sun incentive, since that reduction happens before you sign.
- Subtract the New York State credit — $5,000 for most residential systems, or 25% if the system is small enough that the cap does not bind.
- Subtract 30% of the eligible system cost for the City abatement, but note that it arrives as four annual installments, and confirm your property tax bill is large enough to absorb 7.5% of system cost each year.
- Divide what remains by your current annual Con Edison spend on electricity the system will offset.
The honest summary: losing 25D lengthened payback for a cash purchase in NYC, and it did not make solar stop working here. New York City remains one of the better places in the country to install solar, for reasons that have nothing to do with sunshine — high retail electricity rates, a stacked set of state and city incentives, and one-to-one net metering locked for twenty years. What it did do is make the remaining incentives, particularly the abatement, worth understanding properly instead of treating as a footnote.
If you are holding a proposal written before 2026, the useful thing is not a new sales pitch but a corrected line-by-line comparison against what is actually available now. We are glad to do that against a competitor’s quote as readily as our own — send it over and we will mark it up.
One last practical note: the March 15 abatement deadline is a real cutoff, and it is tied to when the filing is received, not when your system was switched on. If your system goes in late in the year, ask your installer to confirm in writing who is filing the abatement application and when. It is the most commonly dropped piece of paperwork in a New York City solar job, and it is worth 30%.