Inflation Reduction Act Solar: What Is Left in New York

If you are buying a solar system in New York in 2026, the short answer is that the residential credit is gone and nothing replaced it. Section 25D was terminated for expenditures made after 31 December 2025 by the law signed on 4 July 2025. There is no phase-down, no transition rule, and no carryover of a credit that was never earned. A buyer in 2026 claims nothing federally.

The test is completion, not energisation

The operative rule matters more than most homeowners realise. An expenditure is treated as made when the original installation is completed — not when the system is placed in service and not when the utility grants permission to operate. The two tests disagree for exactly the people who care: a system finished in December 2025 and energised in January 2026 still qualifies. Told the wrong rule, that homeowner walks away from a credit they are owed.

There is one exception that reverses the answer. Where the solar is installed in connection with the construction or reconstruction of a structure, the expenditure is treated as made when your original use of that structure begins. Panels installed in December 2025 on a house first occupied in January 2026 therefore do not qualify. If you are building, this is the paragraph to take to your preparer.

What actually survives

The business-side credit survives, and it is claimed by the company that owns the system. That is the whole reason third-party offers are still being marketed hard in New York: on a lease or a power purchase agreement the equipment belongs to the provider, the provider takes the federal benefit, and the homeowner sees it only to the extent it is reflected in the payment schedule. It is not a credit you claim and it is not a credit you can verify on your own return.

Business and farm projects sit under a different provision entirely. Do not read anything written about the residential credit as applying to a barn, a shop or a rental portfolio, and do not let a salesperson do it for you. That is an accountant question, and the answer depends on ownership, use and timing.

How to read a 2026 quote

• Any line showing 30% federal is wrong. Ask for the proposal to be reissued without it and look at what the payback becomes. A quote that only works with a dead credit in it was never a quote.
• Ask which entity owns the equipment. That single answer tells you who takes the federal benefit and whether you are buying or subscribing.
• Ask what happens at the end of a lease or PPA term — purchase option, removal, renewal — and get it in the contract rather than in conversation.
• Ask what is assumed about future electricity rates. A payback built on an aggressive escalator is arithmetic, not a forecast.

The New York programmes were never federal

Nothing that happened to the federal credit touched the state ones, and this is where the real money now sits for a purchaser.

The New York State solar energy system equipment credit is 25% of qualified expenditure capped at $5,000, on Form IT-255, for equipment installed and used at your principal residence in New York. A seasonal house, a second home or a rental does not qualify. It is not refundable, it is limited by your actual New York tax liability, and unused credit carries forward up to five years. It reaches leases and power purchase agreements too, but only where the agreement runs ten years or more — that minimum applies to the lease as well as to the PPA, and a five or seven year lease does not reach it. For a lease or PPA the $5,000 is a lifetime ceiling per agreement rather than an annual figure, and no credit is allowed after the fifteenth year of a longer agreement.

NY-Sun, applied by the contractor as a reduction on the price, is structured in megawatt blocks that step down as each block fills, and as of September 2026 NYSERDA has no open NY-Sun block for homes in any utility territory; check NYSERDA’s NY-Sun dashboard for a new one. Affordable Solar, the incentive for households under 80% of area median income, has closed as well: the Con Edison track ran from May to October 2025 and the rest-of-state track from December 2025 to March 2026. Residential solar equipment is exempt from state sales tax, with localities separately electing on their own share. RPTL 487 exempts the added value from property tax for 15 years where the county, the municipality and the school district have each not opted out, and requires construction before 1 January 2030.

Finally, the mechanism that carries the economics: Phase One net metering credits exports at the full retail rate and holds for 20 years from interconnection. Against that, the Customer Benefit Contribution is billed monthly on the DC size of the array — for 2026 between $0.97 and $1.67 per kW-month depending only on which utility your roof sits under. Programmes change annually; check NYSERDA and the New York State Department of Taxation and Finance yourself rather than trusting a slide.

Frequently Asked Questions

Can I still claim the Inflation Reduction Act solar credit in New York?

Not as a homeowner buying a system. Section 25D was terminated for expenditures made after 31 December 2025, with no phase-down and no transition. A 2026 buyer claims nothing federally.

My system was finished in December 2025 but turned on in 2026 — do I qualify?

The test is when the original installation was completed, not when it was placed in service or energised, so completion in December 2025 still qualifies. New construction is the exception: there the test is when your use of the structure begins.

Why do lease and PPA companies still advertise a federal incentive?

Because the business-side credit survives and is claimed by whoever owns the equipment. On a lease or PPA that is the provider, not you, and you see it only through the payment schedule.

What is left for a New York homeowner in 2026?

The state credit of 25% capped at $5,000 on Form IT-255, the state sales tax exemption, RPTL 487 property tax relief, and Phase One net metering at the full retail rate for 20 years. NY-Sun and its Affordable Solar incentive have no open block for homes as of September 2026.

This article is general information, not tax, legal or financial advice. Incentive amounts, eligibility rules and deadlines change and depend on your utility, your tax situation and your property. Confirm current terms with NYSERDA, your utility and a qualified tax professional before making a decision.