Which states offer the most generous property tax exemptions for solar panels

Among U.S. states, many offer property tax exemptions designed to encourage solar panel installation by preventing the added value of solar systems from increasing property tax assessments. The generosity of these exemptions varies by state, as well as the scope (residential vs. commercial) and duration of the exemption.

States with Notably Generous Solar Property Tax Exemptions

• New Jersey exempts solar systems from local property taxes if used to meet on-site electricity or general energy needs, effectively preventing any increase in property tax due to solar installation.
• Nevada allows businesses to apply for a property tax abatement of up to 55% for solar property for up to 20 years, a substantial benefit especially for larger commercial solar projects with at least 10 megawatts capacity.
• New York City offers a solar tax abatement program where owners can deduct 5% of the solar installation cost from their property taxes annually for four years, based on the full system cost before federal tax credits.
• Cleveland and Cincinnati, Ohio provide 100% property tax abatements for qualifying photovoltaic projects, spreading the exemption over 10 to 15 years.

General Overview of Exemptions Across States

• Approximately 25 states have active solar property tax exemption policies that apply to residential solar installations, allowing homeowners to exclude the added system value from their property’s taxable assessed value.
• Some states extend exemptions to both residential and commercial solar projects, including Alabama, Arizona, Colorado, Connecticut, Hawaii, Indiana, Iowa, Kansas, Maryland, Massachusetts, Missouri, New Hampshire, New Jersey, New York, North Dakota, Rhode Island, Texas, Vermont, and Virginia.
• Other states have exemptions that apply only to non-residential or utility-scale solar projects or leave the decision to local authorities.
• California offers a significant new construction exclusion for active solar energy systems, meaning the added value of a solar system does not increase property assessments for tax purposes. This exclusion is not strictly an exemption but achieves a similar effect by excluding the solar system value from reassessment upon installation.

Summary Table of Selected States Offering Generous Solar Property Tax Exemptions

Key Points on How These Exemptions Work

• The property tax exemption generally excludes the added market value from solar panels when assessing property taxes, so homeowners or businesses do not pay higher property taxes despite increased home or property value.
• Some states require an application or claim to receive the exemption, while others automatically grant it upon installation or permit issuance.
• Exemption duration can vary; some states offer permanent exemptions, others provide temporary abatements or exclusions lasting several years.

Conclusion

The most generous property tax exemptions for solar panels are often found in states like New Jersey, Nevada, New York, Ohio, and California, where either full exemption or substantial abatements for significant durations exist, sometimes tied to the size or type of solar installation. For residential solar, about 25 states have policies shielding homeowners from paying additional property taxes due to solar panel value increases. For commercial or utility-scale solar, some states offer even more substantial abatements or exclusions. Homeowners and businesses considering solar should check their specific state’s program details, as incentives and administration can vary widely.