Adding solar panels increases what your home is worth, which sounds like it should increase your property taxes too. In most states it does not, because about 32 states exempt residential solar from property tax assessments. Here is how the exemption works, which states offer it, and the exceptions that can still raise your bill.
- Roughly 32 states exempt home solar systems from property taxes, so panels typically add value without adding tax.
- Where no exemption exists, assessors can tax the added value at the next regular reassessment, not the day your system turns on.
- California’s solar property tax exclusion expires for new systems on January 1, 2027. Completed systems keep it until the home changes hands.
- Texas, Massachusetts, New Jersey, and Maryland are among the states with clear, strong exemptions.
- Solar raises resale value too, with premiums around $4 per watt reported in strong markets, dwarfing any tax question in exemption states.
The Short Answer for Most Homeowners
If you live in one of the roughly 32 states with a solar property tax exemption, your panels will not raise your property taxes. The law tells the assessor to ignore the added value of your solar system. Your home is worth more, but you are taxed as if the panels were not there.
This is one of the most underrated solar incentives in the country. A typical 8 kilowatt system costs $20,000 to $28,000 installed at 2026 prices of $2.50 to $3.50 per watt. If that full amount were added to your assessed value at a 1.5 percent tax rate, you would pay $300 to $420 extra every year. In an exemption state, you pay zero of that. Over 25 years, the exemption is worth thousands, even though it never arrives as a check.
How Property Tax Assessments Actually Work
Your county assessor estimates your property’s market value on a cycle of one to five years, depending on the state. That assessed value times your local tax rate becomes your bill. Anything raising market value, an addition, a renovated kitchen, a finished basement, can raise the assessment at the next cycle, and a solar system clearly adds market value.
Research from Lawrence Berkeley National Laboratory has found consistent premiums for homes with owned solar, and 2026 California market data showed premiums around $4 per watt even after the federal tax credit ended. On an 8 kilowatt system, that is roughly $32,000 in added home value. In a state without an exemption, an assessor can capture some or all of that at reassessment.
The key detail most homeowners miss: reassessment is not immediate. Your taxes do not jump the month your system is installed. Assessors work on cycles and rely on permits, sales data, and inspections to spot improvements. A system installed in March might not affect your assessment for years, but it will show up eventually, especially when the home sells and the sale price resets the baseline.
States With Solar Property Tax Exemptions
About 32 states offer some form of property tax exemption or exclusion for residential solar. The strongest versions exclude the full added value with no time limit. Notable examples as of 2026, though rules change, so verify at DSIRE and with your county assessor:
Texas exempts the added value of solar devices from property taxation, which saves more per year than the same law would in a low-tax state, given Texas property tax rates. Massachusetts offers a 20-year exemption covering the payback period and most of the equipment’s life, stacking with the state’s SMART production incentive. New Jersey exempts panels from property and sales taxes while paying you for generation through its SuSI program, which is why it tops our ranking of which states pay the most for rooftop solar in 2026. New York offers a 15-year exemption, Colorado excludes the full value, Maryland exempts solar at the state level with most counties conforming, and Illinois uses a special assessment that values solar far below market worth. Many of these states also exempt solar equipment from sales tax, an immediate 5 to 10 percent discount on day one.
| State | Property tax treatment | Sales tax treatment | Notes |
|---|---|---|---|
| Texas | Full exemption | Exempt | Very valuable given high TX property tax rates |
| Massachusetts | 20-year exemption | Exempt | Covers payback period and most of system life |
| New Jersey | Full exemption | Exempt | Stacks with SuSI production payments |
| New York | 15-year exemption | Exempt | Plus 25% state tax credit up to $5,000 |
| Colorado | Full exemption | Exempt | 100% of system value excluded |
| Maryland | State exemption; most counties conform | Exempt | Confirm county-level treatment locally |
| California | Exclusion until Jan 1, 2027 for new systems | Not exempt statewide | Completed systems keep exclusion until sale |
| Florida | Full exemption | Exempt | Applies to residential systems |
California’s Exclusion Expires in 2027
Since the 1980s, California Revenue and Taxation Code Section 73 has excluded solar energy systems from property tax assessments. That exclusion expires for new systems on January 1, 2027. Systems completed before that date keep the exclusion until the property changes ownership. A bill to extend it, AB 2389, failed in the 2026 legislative session.
In practice: already installed means nothing changes unless you sell. Installing in 2026 still gets the exclusion if the system is complete before the deadline. Waiting until 2027 or later means the system’s added value, often $25,000 to $35,000 in California markets, could join your assessed value at the next reassessment or sale, costing several hundred dollars a year. Between this deadline, the end of the federal credit, and California’s 2026 solar rules, delaying has a real cost. Get your installer’s committed completion date in writing.
What Happens in States Without an Exemption
In states with no exemption, the honest answer is yes, panels can raise your property taxes, with the added value joining your assessment like any other improvement. Three things soften the blow. First, assessors rarely value a used system at installed cost; depreciation schedules bring the number down. Second, the increase arrives at reassessment, not at installation, giving you years of untaxed savings first. Third, the math usually still favors solar where electricity rates are high: annual bill savings of $1,200 to $2,000 dwarf a tax increase of a few hundred dollars.
One scenario to watch: leased systems and PPAs. In most states a leased system counts as the leasing company’s equipment, not a home improvement, so it typically does not raise your assessment. But leased systems also add less resale value and complicate home sales. The property tax angle slightly favors leasing in non-exemption states, but it is rarely the deciding factor. Our guide to solar and home value covers the resale side.
Pros
- In exemption states, you keep 100 percent of the value your panels add, tax-free.
- Exemptions are automatic in most states, with no application usually required.
- Owned solar still raises resale value, with premiums around $4 per watt in strong markets.
Cons
- In non-exemption states, expect higher assessments at the next revaluation or sale.
- California’s exclusion ends for new systems in 2027, creating a real deadline.
- Some states cap exemptions, time-limit them, or let localities opt out.
Solar, Home Value, and the Bigger Picture
The property tax question only exists because solar makes your home worth more, which is a good problem. Owned systems consistently appraise higher, with $3 to $4 per watt a reasonable planning figure in active markets, so a 7 kilowatt system adds roughly $21,000 to $28,000. In an exemption state you get the full premium with zero tax cost. In a non-exemption state at a 1.5 percent effective rate, a $25,000 increase costs about $375 per year against $1,200 to $2,000 in annual bill savings. Property tax is a footnote in the solar decision, not a headline, except where tax rates are very high and electricity rates very low.
How to Protect Yourself Before You Install
Three steps take less than an hour. First, look up your state on DSIRE and read the property tax entry, including expiration dates and caps. Second, call your county assessor and ask directly how residential solar is treated; they answer this weekly. Third, if you are in California or another state with a scheduled expiration, get the installer’s committed completion date in writing. If you are buying a home with solar, ask for the install date and whether the system is owned or leased. In California, a pre-2027 owned system carries its exclusion until you buy, a small but real negotiating point.
Do solar panels increase property taxes?
In most states, no. About 32 states exempt residential solar from assessments. In states without an exemption, the added value can raise your assessment at the next revaluation or when the home sells.
Which states exempt solar from property taxes?
Texas, New Jersey, Massachusetts, Colorado, Florida, Maryland, New York, and Illinois are among those with exemptions or equivalent treatment. Rules vary, so verify at dsireusa.org and with your county assessor.
Is California ending its solar property tax exclusion?
For new systems, yes. The exclusion under Revenue and Taxation Code Section 73 expires for systems completed on or after January 1, 2027. Earlier systems keep it until the property changes ownership.
Will my taxes rise as soon as panels are installed?
No. Assessments run on cycles, not at installation. Even without an exemption, added value typically appears at the next scheduled reassessment or at sale.
Do leased solar panels affect property taxes?
Usually not. Leased systems are generally the leasing company’s equipment, not a home improvement, so assessments rarely change. The tradeoff is less resale value than owned systems.
Does solar raise my home’s resale value?
Yes, for owned systems. Premiums around $3 to $4 per watt are common in active markets, so a 7 kilowatt system can add roughly $21,000 to $28,000 in appraised value.
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