In April, Assessor Rolf Kleinhans and the Nevada County Assessor’s Office alerted property owners that California’s active solar energy system property tax exclusion was scheduled to expire Jan. 1. The California State Board of Equalization has now issued Letter to Assessors No. 2026/034, confirming the upcoming change and providing guidance on how the exclusion will apply before and after the deadline.
What Property Owners Should Know
- The installation of a qualifying active solar energy system must be completed before Jan. 1 to qualify for the current property tax exclusion.
- Solar energy system construction that remains in progress as of Jan. 1 will not qualify for the property tax exclusion and will be subject to assessment as new construction.
- After the exclusion expires, the installation of a qualifying solar energy system will be considered assessable new construction. The market value of the solar energy system will be added to the property’s existing assessment resulting in an increase in property taxes.
- For example, if a property has an existing assessed value of $300,000 and a solar energy system is installed after the exclusion expires, the assessable value of the solar system would be added to the $300,000 assessment.
- Solar energy systems that qualify for the property tax exclusion before Jan. 1 will remain excluded from assessment after the exclusion expires, until there is a subsequent change in ownership.
Why the Deadline Matters
California’s active solar energy system property tax exclusion was first enacted in 1980 and has been extended several times. Although legislation has been considered to further extend or modify the exclusion, no extension has been enacted. Property owners planning to install a solar energy system should not assume the deadline will be extended and should allow sufficient time for permitting, installation, inspection, and completion before Jan. 1.
Learn More
For additional information about the Active Solar Energy System Exclusion and to learn more if your potential solar project meets the criteria to qualify for the exemption, please visit the California State Board of Equalization’s Active Solar Energy System Exclusion. For specific guidance regarding the sunset date, see Letter to Assessors No. 2026/034.
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.