Did New York’s All-Electric Building Act Pass?

New York’s All-Electric Building Act is a state law, passed in May 2023 as part of the Fiscal Year 2024 budget, that requires new buildings across the state to use electricity instead of fossil fuels for heating, hot water, and clothes drying. The first deadline is January 1, 2026, when most buildings of seven stories or fewer must comply. Taller residential buildings and smaller commercial buildings follow on January 1, 2029.

What the Law Bans

In a building covered by the act, three end uses can no longer run on fossil fuels: space heating, domestic hot water, and clothes drying.¹ That means no gas furnaces, no oil boilers, no gas-fired water heaters, and no gas clothes dryers.

The prohibition reaches the infrastructure too, not just the appliances. Builders cannot run gas service lines or internal fuel piping to serve those systems, and electrical panels have to be sized for the full load of the heat pumps, electric water heaters, and other equipment taking the place of gas-powered units. A covered building has to be physically incompatible with fossil-fuel hookups from the start.

Fossil fuel-based cooling systems are not part of the mandate. The focus is heating, hot water, and drying.

Who Must Comply and When

The rollout runs in two phases based on building size, and the trigger is the date the building permit application is submitted.

January 1, 2026: New buildings of seven stories or fewer, plus commercial buildings with 100,000 square feet or more of conditioned floor area.¹
January 1, 2029: Residential buildings over seven stories and commercial buildings under 100,000 square feet of conditioned floor area.¹

It’s the filing date that matters, not groundbreaking or completion. A seven-story residential project with a permit application filed in December 2025 is not covered. The same project filed a month later is.

Exemptions and Conditional Uses

Some buildings are fully outside the mandate. Emergency and standby generators are exempt, so any building can still keep diesel or natural gas backup power. Manufactured homes and certain agricultural buildings are also excluded.¹

Other building types get a narrower carve-out. Commercial kitchens in restaurants, hospitals and medical facilities, laboratories, laundromats, car washes, crematoriums, and manufacturing facilities may burn fossil fuels for their specialized processes. They still cannot use gas or oil for space heating or domestic hot water. A restaurant can install a gas range, but its heat has to come from a heat pump and its hot water from an electric water heater.

Buildings using these conditional exemptions must be built “electrification-ready,” with electrical infrastructure in place to convert the remaining gas systems to electric later. The exemption is designed as a bridge, not a permanent pass.

Waivers When the Grid Can’t Deliver

The act includes a safety valve tied specifically to grid capacity. If the local utility determines in writing that it cannot provide reliable electric service to the site within a reasonable timeframe, the project may install fossil fuel systems instead.¹ The Public Service Commission sets the standards for that determination.

The written finding has to come from the utility, not the builder. A developer who suspects the local grid is inadequate needs to engage the utility early and secure that determination before the permit is approved. Local building officials cannot issue this waiver on their own for financial hardship reasons; it is a grid-capacity waiver.

How Enforcement Works

Local building departments handle enforcement at two points. During plan review, officials check mechanical, power, and fuel-gas specifications for prohibited equipment. At final inspection, the installed systems must match the approved all-electric plans before a certificate of occupancy is issued.

Violations are handled like any other breach of the Uniform Fire Prevention and Building Code, including orders to remedy and court-ordered abatement if the violation is not fixed. Penalties can reach $1,000 per day. In practice the real leverage is the certificate of occupancy: a building that installs a noncompliant gas furnace cannot be occupied until it comes into compliance, and rip-and-replace costs quickly exceed the daily fines.

Existing Buildings, Renovations, and Additions

The act applies only to new construction. If you own a home with a gas furnace or an oil boiler, nothing in this law requires you to replace it. Renovations, repairs, and additions to existing buildings are not covered either, and you can still use gas in an addition to your current home.¹

Building in New York City

New York City passed its own electrification law, Local Law 154, before the state act. LL154 bans fossil fuels in new buildings for space heating and hot water and reaches further than the state law by restricting fossil-fuel cooking ranges and domestic appliances. It has its own timeline, exemptions, and enforcement through the NYC Department of Buildings.²

For a project inside the five boroughs, both laws can apply and the stricter requirement governs. The most practical difference: LL154 covers cooking equipment more broadly, while the state act still allows conditional fossil-fuel use in commercial kitchens.

Incentives That Offset the Cost

Electric heating and hot water systems generally cost more up front than conventional gas equipment. Several programs help close that gap, though the federal side is expiring quickly.

Federal Tax Credits and Deductions

The Section 45L tax credit gives builders up to $2,500 per qualifying energy-efficient home, or up to $5,000 per home for projects meeting the Department of Energy’s Zero Energy Ready Home standards. The credit expires for homes acquired after June 30, 2026.³

For commercial projects, Section 179D offers a per-square-foot deduction for buildings that hit energy efficiency targets. It is being repealed for projects that begin construction after June 30, 2026.³ Projects filing permits in the first half of 2026 have a narrow window to capture both.

New York State Rebates

The state’s Clean Heat Rebate Program, run through utilities such as NYSEG and RG&E, pays up to $10,000 for air source heat pumps, up to $18,000 for ground source heat pumps, and up to $2,500 for heat pump water heaters. Starting January 1, 2026, residential clean heat rebates are limited to homes with one to four units, and customers must have electric or combination gas-and-electric service from a participating utility. Because the program was designed for replacing existing systems, new-construction eligibility should be confirmed with the local utility before design decisions get locked in.⁴

Ongoing Legal Challenges

The state act has not been struck down, but litigation over similar laws is unresolved. In 2023 the Ninth Circuit invalidated a Berkeley, California ordinance that banned natural gas piping in new buildings, holding that the federal Energy Policy and Conservation Act preempts local rules that effectively prevent covered gas appliances from being used, even when the rule targets piping rather than appliances.⁵

New York City’s Local Law 154 drew a similar challenge. In 2025 a federal district court in Manhattan reached the opposite conclusion, ruling that LL154 is not preempted because it regulates the type of fuel used rather than the energy efficiency of the appliances. That decision is now on appeal to the Second Circuit. If the Second Circuit affirms, the legal ground under the state act firms up considerably. If the case splits further from the Ninth Circuit, the Supreme Court may eventually take it up. For now, the All-Electric Building Act remains in effect and on schedule for its January 2026 start.

1
New York State Assembly. All Electric Buildings
2
New York City Department of Buildings. Building Electrification (LL154)
3
Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under Public Law 119-21
4
NYSEG. NYS Clean Heat Rebate Program
5
Justia Law. CRA v City of Berkeley, No 21-16278 (9th Cir. 2023)