New York enacted legislation in July 2005 exempting the sale and installation of residential solar-energy systems from the state's sales and compensating use taxes. The exemption applies to solar-energy systems that utilize solar radiation to produce energy designed to provide heating, cooling, hot water and/or electricity. The exemption does not apply to solar pool heating or other recreational applications. There does not appear to be an expiration date* for this incentive.  

detailing local tax rates and exemptions, including those for solar energy equipment. The solar sales tax list (Publication 718-S) is updated several times per year.  
 
*The New York Code contains duplicate sections NY CLS Tax § 1115 (ee). The first pertains to the sales tax exemption for residential solar energy systems and contains no expiration date, while the second contains rules for an unrelated exemption with expiration dates of December 1, 2010 and December 1, 2012. This appears to be a mistake that will not affect the sales tax exemption for residential solar energy equipment.pment.

The law also permits local governments (municipalities and counties) to grant an exemption from local sales taxes. If a city with a population of 1 million or more chooses to grant the local exemption, it must enact a specific resolution that appears in the state law. The New York Department of Taxation and Finance publishes a variety of

sales tax reports

Technologies Eligible:  Solar Water Heat, Solar Space Heat, Photovoltaic, Fuel Cells

Amount of Tax Credit:  25 Percent Tax Credit Cap:  5,000 Dollars

Carryover:   Excess credit may be carried forward five years

Summary: Enacted in August 1997, this personal income tax credit originally applied to expenditures on solar-electric (PV) equipment used on residential property. The credit, equal to 25% percent of the cost of equipment and installation, was expanded in August 2005 to include solar-thermal equipment. The solar-thermal provisions apply to taxable years beginning on and after January 1, 2006.  

S.B. 7171 to permit net metering for residential PV systems up to 25 KW. It is unclear at this point whether the state intends for the new net metering limits to apply to the tax credit described above. The 2008 Solar and Fuel Cell Tax Credit Form IT-255 does not specifically address this issue.

S.B. 7171 to permit net metering for residential PV systems up to 25 KW. It is unclear at this point whether the state intends for the new net metering limits to apply to the tax credit described above. The 2008 Solar and Fuel Cell Tax Credit Form IT-255 does not specifically address this issue.

The credit is capped at $5,000 for solar-energy systems placed in service on or after September 1, 2006.  
 
Any amount of credit that exceeds a taxpayer's liability in a given tax year may be carried forward for the five following taxable years. Any amount of the system cost provided by a grant from any source is not eligible for this credit.  
 
Solar-energy equipment is defined as "an arrangement or combination of components utilizing solar radiation, which, when installed in a residence, produces energy designed to provide heating, cooling, hot water or electricity." The credit may not be used for pool heating or other recreational applications.  
 
Systems must comply with the 10 kW capacity limit on residential, net-metered solar-energy systems*. In 2007, legislation was passed increasing the capacity limit to 50 kW for condominiums and cooperative housing associations. In addition, members of condominium management associations and tenant stockholders of cooperative housing associations are now allowed to claim a proportionate share of the total system expense towards the tax credit. These changes take effect beginning in the 2007 tax year, but as with other portions of the tax credit, they do not have an expiration date.  
 
Fuel cells installed at a principal residence are eligible for a 20% tax credit, with a maximum credit of $1,500. To qualify, fuel cells must provide a maximum rated baseload capacity of 25 kW and must utilize proton exchange membrane (PEM) technology.  
  
*The language of the tax credit generally requires that PV systems conform to the state's net metering law, thereby limiting system size to 10 kW. In August 2008, the state net metering law was expanded by