NYS Solar Tax Credits

What NYS Solar Tax Credits and Incentives Are Available Now?

NYS Solar Tax Credits

By taking advantage of government incentives and tax credits a solar power plant for your home is a solid financial investment. Payback periods are short, return on investment high and you fix your energy costs well into the future. There are three levels to these as follows:

  1. NY-SUN Solar PV Rebate or Incentive ($0.40 / W)
  2. Federal Tax Credit (30%)
  3. NYS Tax Credit (25% up to $5,000)

How Do They Actually Work?

NY-SUN Solar PV Rebate:

  • This funding is as good as cash right off the cost of your project.
  • The $0.40 / W means it is based on the DC output of the array.
  • This NY-SUN funding is decreasing, so there is some time pressure on this.

30% Federal Tax Credit:

  • This is a direct bottom line deduction from your federal tax bill.
  • There is time pressure on this, too, because we don’t know if this credit will continue, but it is still in place now.

25% NYS Tax Credit:

  • This is a direct bottom-line deduction from your state tax bill.
  • The NYS Tax Credit tops out at $5,000.
  • This NYS Tax Credit will continue on.

What Does this Save Me for My Project?

Let’s take a typical 2,000 square foot suburban home using about 7,500 kWhr of electrical AC power per year. We could cover 98% of this usage with 18 roof mounted panels of 340 Watts each, generating a total of 6,120 KW of DC power. Don’t worry when the inverter converts it to AC it will produce 7,344 kWhr of AC power needed. Please realize there are lots of assumptions imbedded in this like no shading impact from trees, a south facing roof plane, enough space on the roof to mount the 18 panels, etc.

Next, to the main point, the numbers below illustrate how the incentive and tax credits play out:

Total Project Costs
Total System Cost$20,250
NY-SUN Solar PV Rebate ($0.40/W)*-$2,488
Contract Cost$17,802
30% Federal Tax Credit*-$5,341
25% NYS Tax Credit ($5,000 maximum)*-$4,451
Effective Total Cost$8,011

Would You Lead Me Through the Specifics?

NY-SUN Solar PV Rebate:

  1. This funding is as good as cash and goes to the system builder (Geotherm, Inc.) upon completion of the project.
  2. The $0.40 / W means it is based on the DC output of the array. In this case it is 6,120 KW DC so multiply that by $0.40 to get $2,448.
  3. An important point here is that this NY-SUN funding is decreasing in increments of $0.10 / W, so the next drop will be to $0.30 / W. For this project it would drop to only $1,836, a decrease of $612, so there is some time pressure on this.

30% Federal Tax Credit:

  1. This is based on your Contract Cost of $17,802, so multiply that by 0.30 to obtain the $5,341.
  2. This is a direct bottom-line deduction from your federal tax bill for the year when you paid for your solar system.
  3. In other words, you don’t have to pull $5,341 out of your pocket to pay your federal taxes, or the government pays you back for the loan you floated the government.
  4. There are a couple of forward thinking cash flow management strategies that can be leveraged here as follows:
    – Employees: Significantly increase your deductions to pay less tax during the year of your solar install.
    – Self-Employed: Stop paying taxes now. I have an S-Corp. I pay myself first and the government last. Works for me.
  5. Congress agreed to extend the credit at the current 30% rate through 2019, after which it will fall to 26% in 2020, 22% in 2021 and 10% in 2022.

25% NYS Tax Credit:

  1. Same points here as 1-4 above, only this time relative to NYS
  2. This is based on your Contract Cost of $17,802, so multiply that by 0.25 to obtain the $4,451.
  3. The maximum NYS Tax Credit is limited to $5,000
  4. This NYS Tax Credit will continue on.

What’s “The Bottom Line” from all this?

It’s a short payback period and excellent return on your investment, in this specific case, as follows:

25 Year Investment Benefits (Warranty Period)
Cash Payback (Years)9.1
Annual Rate of Return (25 Years)15.3%

And, as we all know, the only certainties in life are death, taxes and that energy costs will increase. How else can you fix your future energy cost to today’s rates, get a 15% Return On Investment, move towards greater levels of self-reliance and make the government pay for most of your system? The other point relative to mutual funds, 401Ks and the market; this investment will never go negative.