Solar Energy Tax Bills Passed for New York State

It has been a good week for solar energy. Right on the heels of being granted a 30 percent federal investment tax credit through the federal energy bill, solar also secured tax credits at the state level in New York. Governor George E. Pataki has signed into law two bills to promote the use of solar energy in New York State by offering homeowners tax incentives that would reduce the net cost of solar installation.

The legislation (S.4962-a) exempts the sale and installation of solar energy systems equipment from state sales and compensating use taxes, and gives municipalities the option of granting the local exemption. A second bill (S.5252) broadens the existing solar electric generating equipment personal income tax credit to also include equipment utilizing solar radiation to provide heating, cooling and/or hot water. The bill also increases the maximum allowable credit to $5,000. The credit is currently capped at $3,750. The personal income tax credit covers 25 percent of the qualified expenditures for the purchase and installation of the solar energy systems equipment. “New York State has become a national leader in advancing, clean-energy technologies and solutions that will protect our environment and preserve our energy resources,” Governor Pataki said. “By providing these energy tax credit measures we will allow New York to build on that historic progress and help preserve the State’s cherished resources for generations of New Yorkers who will follow. Investing in clean, renewable energy sources, such as solar, will help clean the air we breathe, make us less dependent on foreign fuel, and help create new jobs and businesses right here in New York State.” The laws are expected to promote both solar thermal systems for providing for a home or businesses’ hot water, and solar photovoltaic systems that provide electrical power. Water heating is the third largest energy expense in a typical home and accounts for 14 percent of a homeowner’s utility bill. By making the installation of water heaters which utilize solar energy more affordable, the new law could generate significant savings for homeowners. In addition, over 20 years, a 3 kW solar electric system will eliminate 65 tons of carbon dioxide, which is the chief greenhouse gas responsible for global warming and climate change; 670 pounds of sulfur dioxide, which contributes to acid rain; and 250 pounds of nitrogen oxides, which is the primary ingredient in smog. Over its 20-year lifetime, one solar water heater eliminates more than 50 tons of carbon dioxide emissions. The new law exempting solar energy systems equipment from state sales and use taxes takes effect September 1, 2005. The new law expanding the solar electric system personal income tax credit to include other solar components takes effect immediately and applies to taxable years beginning January 1, 2006. “Suffolk County will be among the first municipalities in line to opt into the sales tax exemption for the sale and installation of solar energy equipment,” said Suffolk County Executive Steve Levy. “We are hopeful that these types of financial incentives will go a long way towards encouraging our homeowners to use the cleanest and most renewable source of energy known to man – the sun.” In addition to these new bills, and as a reminder, NYSERDA currently offers cash incentives for the installation of small PV or solar-electric systems under its New York Energy $martSM Photovoltaic (PV) or Solar Electric Program. The program offers incentives that can help offset the total installation costs of a PV system by 40-70 percent. For more information on NYSERDA solar programs see the following link.


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