Assessor Rolf Kleinhans advises property owners considering solar panel installation to plan ahead, as California’s property tax exclusion for active solar energy systems is scheduled to expire on Jan. 1, 2027, unless the state extends it.
The state’s Active Solar Energy System Exclusion allowed many homeowners to add solar energy systems without increasing their property tax assessment. After the sunset date, new solar installations may be treated as taxable new construction. Homeowners with existing solar systems will continue to receive the exclusion, even when the law sunsets.
What is a Solar Exclusion?
The California State Board of Equalization explains that the property tax incentive for installing an active solar energy system is provided as a new construction exclusion. This means that installing a qualifying solar energy system does not increase or decrease the assessed value of an existing property for tax purposes.
In practical terms, adding solar panels will not raise your property taxes. In most cases, once the local building department issues a permit and notifies the Assessor’s Office, the exclusion is automatically applied. No additional paperwork is typically required from the property owner.
What Qualifies as an Active Solar Energy System?
Under California Revenue and Taxation Code Section 73(b)(2), an active solar energy system is defined as a system that collects, stores, or distributes solar energy. This generally includes solar panel systems designed to meet a property’s electricity needs.
However, not all solar-related systems qualify for the exclusion. The following are not eligible:
- Solar swimming pool heaters
- Hot tub heaters
- Passive solar energy systems
- Wind energy systems
Learn More
For additional information about the Active Solar Energy System Exclusion, please visit the California State Board of Equalization’s Active Solar Energy System Exclusion.
Additional questions?
Visit us online at Nevada County Assessor’s Office, email us at assessor@nevadacountyca.gov, call 530-265-1232 or stop by our office at 950 Maidu Avenue in Nevada City.