Does Long Island Solar Still Make Sense Without the Federal Solar Tax Credit?
Yes, residential solar can still generate strong savings for Long Island homeowners, even without the now-defunct federal solar tax credit. There is still a significant New York State tax credit, or you could even leverage a commercial solar tax credit if you choose to lease your system.
Here’s what you need to know about solar tax credits in 2026 and beyond.
Key Takeaways
- The 30% federal residential solar tax credit no longer applies. It was eliminated on December 31st, 2025.
- New York State offers a 25% tax credit, up to a maximum of $5,000.
- A detailed cost/benefit analysis can reveal the payback period for your potential solar installation on Long Island.
What Happened to the Federal Solar Tax Credit
The federal solar tax credit for residential systems was eliminated under the One Big Beautiful Bill Act of 2025. Any system installed after December 31, 2025, is ineligible.
Leveraging the Commercial Tax Credit for Residential Solar Panels
Leases and power purchase agreements (PPAs) work differently. The company that owns the system can still claim a commercial tax credit (Section 48E). You can benefit from this credit.
The Participate Energy Program is a prepaid solar lease program available on Long Island through Power Solutions.
- You can lease solar panels on a prepaid term with no monthly repayments.
- The system is owned by Participate Energy.
- Participate Energy claims a federal commercial solar tax credit.
- The savings are passed on directly to you as a discount on your prepaid lease.
There is no FICO score requirement, no UCC lien on your home, and Power Solutions manages the physical installation and maintenance. It’s the easiest way to get residential solar panels without shouldering the total cost of the system.
If you do decide that you want to own the solar panels and all equipment, there’s an option to purchase in the 6th year of the lease.
Owning Solar Panels Outright and the New York State Solar Tax Credit
If you decide that you would prefer to own your panels and finance the installation, you can claim a New York State solar tax credit.
- This state credit is worth up to 25% of the total cost of your solar installation (panels, equipment, and labor).
- It is capped at $5,000.
- It is not refundable but can carry over for 5 years.
This creates a significant reduction in the actual cost of your residential solar installation. There are other financial benefits when you finance your system or pay for it outright:
- There’s a sales tax exemption on residential solar equipment in New York.
- Any value created by your solar panels won’t affect your property tax for 15 years.
Understanding the Solar Payback Period
Solar panels in New York have an average payback period of 8 to 10 years. The payback period will depend on the total cost of your system and the savings that it generates.
Consider this functional example: A solar installation that costs $24,000 could qualify for a total state tax credit of $5,000, leaving the system at a net cost of $19,000. If that system generated $2,000 in savings each year, it would have a payback period of roughly 9.5 years. Solar panels last a minimum of 25 years. Any savings after the payback period go right back into your pocket.
Frequently Asked Questions
Is the Federal Solar Tax Credit Completely Gone for Homeowners?
Yes, homeowners can no longer claim a federal solar tax credit under the residential category. However, you could lease solar panels through the Participate Energy Program, and a 30% commercial tax credit would be applied to your prepaid lease as a discount.
Does New York State Have a Solar Tax Credit?
Yes, New York State offers a solar tax credit worth 25% of the installation, up to $5,000.
Is Solar Worth It on Long Island?
Yes, in most cases, solar will generate savings well beyond the cost of installation. The average payback period is 8 to 10 years.
Get a Free Home Solar Estimate Today
Power Solutions is one of the best-rated solar contractors on Long Island. You can get a free ballpark solar estimate online. Our team will also prepare a cost/benefit analysis to show you the full financial picture of switching to solar. Talk to a local solar consultant at (631) 348-0001 today.
