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Legislation to change an outdated solar tax credit law has widespread support, and could make it into this year’s state budget, advocates say.
While most of the legislation aimed at advancing New York’s fight against climate change has been sidelined in this year’s state budget talks, a bill to make solar power more accessible by updating a nearly 20-year-old tax credit law is seeing widespread support.
Under the current law, homeowners can reduce their income tax payments by 25 percent of the cost of their solar panel system, up to a max of $5,000. The proposed legislation would double that cap to $10,000, and give low-to moderate-income residents the option to collect the credit as a tax refund.
It would also make it easier for co-ops and condos to access the benefit by essentially removing a limit on the amount of solar power these properties can use the tax credit towards.
The bill was included in both the Senate and the Assembly’s “one-house” budget proposals. If it makes it into the final budget, it automatically passes both houses, and just needs Gov. Kathy Hochul’s signature to become law.
Although opposition from fossil fuel groups has divided legislators on more contentious bills like the NY Heat Act, which would curb the state’s expansion of gas instructure, supporters say the solar tax credit bill will likely make this year’s budget, due on April 1.
“It’s a no brainer,” said Sen. Peter Harckham, who is sponsoring the bill in the Senate. Brooklyn Assemblymember Latrice Walker sponsored the Assembly version.
“I don’t see who would be opposed to something like this. We’re cleaning our air, we’re adding clean energy to the grid, and we’re allowing the homeowners to save money on their electric bills,” Harckham added.
What does the bill do, exactly?
The legislation is appealing, advocates say, because it makes it easier for low-to-middle income homeowners to access the solar incentive.
As it stands, homeowners who don’t have taxable income, or whose tax liability is less than the credit would be worth—like someone who is retired—can’t use much of the benefit.
“Homeowners with an annual income above $50,000 are 2.5 times more likely to have rooftop solar than those making below $50,000, who don’t always pay enough income tax to claim the full credit,” a report by the climate think tank Switchbox says.
And a lot of the people who don’t make enough taxable income happen to be living in co-ops, especially in New York City, experts say.
“There’s a lot of seniors who live in co-ops, a lot of folks on fixed income, so low -to- moderate income homeowners that don’t pay a lot or any state income taxes,” said Graham Van Korff, the solar policy and program manager at Solar One, an organization that helps New Yorkers go solar. “So if there is nothing for them to take the [solar] credit against, they just don’t benefit.”
Since co-op owners own shares in a building, each household claims a portion of the tax credit in proportion to their share. That means some people in the building will qualify for the incentive, while others won’t.
“It becomes a divisive issue that people say: well if not everyone gets this credit, are we really benefiting everyone equally?” said Michael Parella, president of a six-story co-op in Jackson Heights, Queens.
By giving people the option to collect the tax credit as a refund, the new bill addresses the equity issue and allows more homeowners to use the incentive, advocates argue.
Solar is a “cash positive project,” Parella says. Once a system is up and running, homeowners will save money on their energy bills and eventually get back their upfront investment.
But co-ops face another obstacle that the bill hopes to address.
Under the current law, coops and condos can only apply the tax credit to the first 50 kilowatts (kW) of solar energy their system uses. Many of these properties, however, need to install systems well over that size to supply all households with enough energy. So if a co-op needs an 80kW system, they are currently only getting the tax credit incentive for the costs associated with the first 50kW, or 25 percent of those costs.
The legislation changes the language in the original bill to exponentially increase that limit to 10 kilowatts multiplied by the number of owner-occupied units in a building. Still, there are a lot of upfront costs associated with solar that can make it daunting for those looking to put up the panels.
Pricing depends on the type of property. A large 127-unit co-op, for instance, could face an estimated $164,000 in upfront building costs, according to Solar One. The estimated cost is $76,000 for a 30-unit co-op, and for a 1-4 family residential home, the price is around $30,000.
While the solar tax credit bill doesn’t address the upfront cost issue directly, Kate Selden, a senior policy manager at Solar One,says homeowners can still take out a loan and use the tax credits.
Making it easier for more properties to switch to clean energy is urgent, supporters say, especially since only 29 percent of New York’s power comes from renewable sources right now.
“New York State is behind on its renewable energy goals. And so anything we can do to accelerate solar will play a major role in helping expand renewable energy,” Selden said.
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