A solar property tax exemption prevents the value that solar panels add to your home from increasing your annual property tax bill. Without this exemption, installing $20,000 worth of solar could increase your assessed property value by $20,000 or more — adding potentially $200–$500 per year in property taxes depending on your local tax rate, partly offsetting the savings from solar. Most US states have passed property tax exemptions for solar, but the details — and whether the exemption is automatic or requires an application — vary significantly by state.
How Solar Affects Your Property Value and Property Taxes
Research consistently shows that owned solar systems increase home values. The most-cited study, from Lawrence Berkeley National Laboratory (LBNL), found that buyers pay a premium of approximately $4 per watt of installed solar capacity — so a 10 kW system adds roughly $40,000 in home value. A 2019 Zillow study found that homes with solar sold for 4.1% more on average than comparable non-solar homes.
This home value increase creates a property tax problem in the absence of a solar exemption. Property taxes are based on assessed value, and higher assessed value means higher taxes. At a 2% effective property tax rate (roughly the national average), a $40,000 increase in assessed value would add $800 per year in property taxes — enough to meaningfully reduce solar’s financial advantage.
States with solar property tax exemptions shield homeowners from this outcome by instructing assessors not to include solar equipment value when calculating the home’s assessed value for property tax purposes. The solar system still adds real market value to the home (you’d capture it if you sell), but it doesn’t increase your tax bill while you own the property.
Which States Have Solar Property Tax Exemptions?
The following states currently have solar property tax exemptions or exclusions:
Arizona: Full exemption — solar systems not included in assessed value. Applies to systems installed on residential or commercial property.
California: Active Solar Energy Systems exclusion under Revenue and Taxation Code Section 73. Exempts qualifying solar systems from property tax reassessment through December 31, 2026, with extensions expected. Automatic — no application needed; applies when permit is pulled.
Colorado: Renewable energy equipment is exempt from property taxation. Applies to residential and commercial systems.
Connecticut: Renewable Energy Systems exemption. Local municipalities apply it; check your town’s assessor for specific form requirements.
Florida: Florida’s “Renewable Energy Source Device” exemption excludes solar equipment from real property assessments. No application required.
Illinois: Property tax exemption for solar energy systems installed on residential property. Systems must be used primarily to heat or provide electricity for the property where installed.
Maryland: Full exemption — solar equipment is not included in assessed property value.
Massachusetts: Partial or full exemptions available; administered at the municipality level. Check with your local assessor’s office.
Minnesota: Solar energy systems exempt from property taxes. Applies to residential systems.
Nevada: Renewable energy systems (including solar) exempt from property tax as personal property. Check local county assessor for residential application details.
New Jersey: Solar and wind energy systems exempt from local property taxes. The exemption is automatic for residential systems with proper permits.
New Mexico: Solar systems are exempt from property taxes.
New York: Real Property Tax Law Section 487 provides a 15-year property tax exemption for qualifying renewable energy systems installed in New York. Exemption applies to the added value from the solar system. Most municipalities participate automatically; some have opted out — check your county.
North Carolina: Renewable energy property tax exemption available. Application required with county assessor’s office.
Ohio: Solar and other renewable energy systems exempt from property taxation under Ohio Revised Code.
Oregon: Residential Energy Tax Credit (property tax exemption) available. Application required with Oregon Department of Energy.
Texas: Solar and wind-powered energy devices are exempt from property taxes under Texas Tax Code. Exemption is automatic — no application required.
Virginia: Solar energy equipment is partially exempt from local property taxes. Local governments set specific exemption levels; check your county or city.
Wisconsin: Solar systems are exempt from property tax assessment.
States without clear solar property tax exemptions include Georgia, Alabama, Mississippi, Indiana, and several others — if your state isn’t on this list, check your state’s department of revenue or energy for current status, as legislation changes.
How to Apply for the Exemption
The application process varies by state:
Automatic exemptions (no application needed): Texas, Florida, New Jersey, Arizona, Colorado. The exemption applies automatically once your solar system has permits filed. Your county assessor already knows to exclude solar equipment from assessed value.
Permit-triggered exemptions: California. The exemption is automatically triggered when your solar installation permit is pulled — no separate tax application required.
Homeowner application required: New York (Form RP-487), North Carolina, Oregon, Virginia (varies by locality), Massachusetts (varies by municipality). In these states, you must file an exemption application with your local assessor’s office after installation. Missing this filing means you don’t receive the exemption — check your specific state’s timeline, as some require filing in the same year as installation.
In all cases, keep records of your installation: permit copies, installer invoices, final inspection sign-offs. These documents are often required with exemption applications and serve as proof of the system’s qualifying nature.
Solar Property Tax Exemptions vs. Sales Tax Exemptions
Many homeowners confuse these two types of solar exemptions. They’re different:
Property tax exemption: Prevents solar installation from increasing your annual property tax bill. Applies ongoing for as long as you own the home (or for a specified period, like New York’s 15 years). Worth $200–$800+/year depending on your local tax rate and system size.
Sales tax exemption: Removes sales tax from the purchase of solar equipment at the time of installation. A one-time benefit, not ongoing. A 7% sales tax on a $15,000 equipment cost saves $1,050 at the point of purchase. States with sales tax exemptions for solar include California, Arizona, Colorado, Maryland, Massachusetts, New Jersey, North Carolina, Texas (for qualifying equipment), and others.
Some states offer both; some offer only one. Your installer should be familiar with the exemptions available in your state and should factor them into your proposal. If they don’t mention state incentives, ask specifically.
Leased Solar Systems and Property Tax Exemptions
If you lease your solar system (rather than purchasing it), the solar equipment is legally owned by the leasing company — not you. Property tax exemptions typically apply to the equipment owner. In a lease or PPA arrangement, the leasing company may or may not be responsible for any property tax on the equipment; check the terms of your lease agreement.
From your perspective as a homeowner with a leased system, the system typically doesn’t increase your assessed property value because you don’t own it — it’s personal property of the leasing company, not a real property improvement in most assessors’ views. The practical result is similar to having a property tax exemption, but the mechanism is different.
Frequently Asked Questions
Do I have to apply for the solar property tax exemption, or is it automatic?
It depends on your state. Texas, Florida, New Jersey, Arizona, and California apply exemptions automatically through the permitting process. New York, North Carolina, Oregon, and Virginia (among others) require homeowners to file an exemption application with the local assessor’s office. Research your specific state’s process promptly after installation — missing filing deadlines can mean missing the exemption for the year of installation.
How much money does the solar property tax exemption save?
The savings depend on your local property tax rate and system size. For a 10 kW system adding $40,000 in home value, a 2% effective property tax rate would add $800/year without an exemption. The property tax exemption eliminates this ongoing cost. Over a 25-year solar system life, that’s $20,000 in cumulative property tax savings.
Do solar panels increase my property taxes even without an exemption?
In states without an exemption, solar panels can increase your assessed value when the assessor next re-evaluates your property — typically during a sale, major renovation, or periodic reassessment. Regular reassessment cycles vary: some counties reassess annually, others every 3–5 years. The practical risk of increased property taxes depends on when your county next reassesses after installation.
Does the property tax exemption apply to battery storage too?
Many state solar property tax exemptions specifically include battery storage installed alongside solar panels. California, Maryland, Colorado, and New Jersey include paired battery storage in their exemptions. States with broader “renewable energy systems” exemptions typically include batteries. Check your specific state’s statutory language or ask your installer.
Summing Up
Solar property tax exemptions are widely available — most states have enacted them to ensure that going solar doesn’t cost homeowners more in property taxes than the system saves in electricity costs. In most major solar markets (California, Texas, Florida, New York, New Jersey, Colorado, Arizona), the exemption is available and often automatic with the installation permit. If your state requires an application, file it with your local assessor’s office promptly after installation. For a complete picture of all state and local incentives available for a solar installation at your address, call (855) 427-0058 for a free consultation with a local installer who knows your state’s incentive landscape.
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