Property taxes can have significant impacts on the financial viability of new and existing solar PV systems: an average solar system can raise the value of a home by up to $20,000, and increase the property taxes accordingly. Bundling solar PV installations into property tax assessments lowers the incentive to adopt solar because it raises costs for solar homeowners.
A solar property tax exemption is a simple measure to incentivize residential investments in solar. Thirty-eight states including Texas, North Carolina, Louisiana, and North Dakota currently grant property tax exemptions for solar panel installations and other advanced energy technologies. Allowing exemptions identified in the state constitution or passing new legislation are two common methods to address property tax measures. None of the 18 U.S. jurisdictions that lack a property tax exemption for solar energy systems rank among the top states in the country in terms of the amount of solar capacity installed, despite the fact that many of these states are located in regions of the United States that receive relatively high amounts of solar energy.
Given the promising solar capacity potential of many states, legislatures could consider implementing a property tax exemption for solar to bolster the state’s solar economy.