Installing solar panels does not increase property taxes in California. State law excludes active solar energy systems from property tax reassessment, so adding panels to your home does not raise your assessed value or your annual tax bill.1California State Board of Equalization. Active Solar Energy System Exclusion That protection is scheduled to end on January 1, 2027, so the timing of your installation matters.
Why Solar Would Normally Raise Your Taxes
Under Proposition 13, your property is assessed at market value when you buy it, and that “base year value” can only rise by up to two percent a year afterward. The assessment resets to current market value only when ownership changes or new construction is completed.2California State Board of Equalization. Publication 800-10 – How Property Is Assessed for Property Tax Purposes
When you add something to your property, like a room, a pool, or a solar system, only the value of that addition gets assessed at today’s market rate and added to your base year value.2California State Board of Equalization. Publication 800-10 – How Property Is Assessed for Property Tax Purposes Without a special rule, bolting a $25,000 solar system onto your roof would qualify as new construction, and the assessor would tack that value onto your bill. California created a specific exception to prevent that.
What the Solar Exclusion Covers
Revenue and Taxation Code Section 73 says that adding an active solar energy system to your property does not count as “newly constructed” for property tax purposes. The county assessor does not add the value of the installation to your assessment, and your tax bill stays the same.3California Legislative Information. California Code Revenue and Taxation Code 73
“Active” systems are those that use mechanical or electrical components to collect and convert sunlight. Qualifying uses under the statute include heating water, generating electricity, space heating and cooling, process heat, and solar mechanical energy. Rooftop photovoltaic panels and solar water heaters clearly qualify, and the exclusion also reaches related equipment such as power conditioning gear, transfer equipment, and storage devices that are part of the system.3California Legislative Information. California Code Revenue and Taxation Code 73
Passive solar design does not qualify. South-facing windows, thermal mass walls, and roof overhangs built into the structure are not covered, because the exclusion is written for separate devices that collect and convert solar radiation.
The January 1, 2027 Sunset Date
The exclusion is not permanent. The legislature has extended it multiple times, and the current sunset date is January 1, 2027.1California State Board of Equalization. Active Solar Energy System Exclusion
Systems completed before that date still receive the exclusion. If the legislature does not pass another extension, installations completed on or after January 1, 2027 would be treated like any other new construction: assessed at market value and added to your property tax bill. California has repeatedly extended the exclusion in the past, but there is no guarantee that pattern continues. If you are weighing an installation, the completion date, not the contract date, is what controls.
How to Make Sure the Exclusion Is Applied
If You’re Adding Solar to a Home You Already Own
You do not need to file anything. The county assessor applies the exclusion automatically once it receives a copy of the building permit for your solar project.4California Board of Equalization. Active Solar Energy System Exclusion – Forms
Even so, check your next assessment notice to confirm the solar value was not accidentally included. Assessor offices process thousands of permits and errors happen. A phone call is enough to sort it out.
If You’re Buying a New-Construction Home That Already Has Solar
This is where homeowners lose money. If a developer installed the panels before you bought the house, you have to claim the exclusion yourself by filing form BOE-64-SES (Initial Purchaser Claim for Solar Energy System New Construction Exclusion) with your county assessor. Three conditions apply: the building was completed on or after January 1, 2008; the developer did not already claim the exclusion; and you file the form with documentation showing what portion of the purchase price is attributable to the solar system.4California Board of Equalization. Active Solar Energy System Exclusion – Forms
If you never file the form, the solar system’s value stays baked into your base year assessment for as long as you own the home. Ask your builder whether they already claimed the exclusion, and if not, submit BOE-64-SES promptly after closing.
Leased Panels and Power Purchase Agreements
Many homeowners lease their systems or sign a power purchase agreement where a third party owns the equipment on the roof. The exclusion still applies. Because the system was excluded from the definition of new construction when it was installed, it stays excluded so long as there is no change in ownership of the system itself.
One thing to watch: if you later buy out a leased system, that purchase can terminate the exclusion and make the system assessable. Returning the equipment to the leasing company at the end of the term does not change your assessed value. Systems installed on leased land or leased rooftops also qualify.
What Happens When You Sell
The exclusion benefits you while you own the home, but it does not survive a sale. When the property changes hands, the buyer’s base year value is set at the full purchase price, which reflects the added value of the solar installation. Their property taxes are based on what they paid, solar included.2California State Board of Equalization. Publication 800-10 – How Property Is Assessed for Property Tax Purposes For you as the seller, that means lower taxes during ownership and, based on research showing solar increases California home sale prices, a chance to recover the investment at closing.
The Federal Solar Tax Credit Is Gone
If you are researching incentives, you will still find plenty of pages describing a 30 percent federal tax credit. That credit, the Residential Clean Energy Credit under Section 25D of the Internal Revenue Code, was terminated for any expenditures made after December 31, 2025.5Office of the Law Revision Counsel. 26 USC 25D – Residential Clean Energy Credit
The One Big Beautiful Bill, signed into law in 2025, accelerated the credit’s end date. If your installation is completed after December 31, 2025, you cannot claim the Section 25D credit no matter when you signed the contract or paid a deposit. The IRS treats the expenditure as made when installation is completed, not when payment is made.6Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under the One Big Beautiful Bill
With the federal credit off the table, California’s property tax exclusion is the most significant remaining tax benefit for residential solar, which makes the 2027 sunset the deadline to plan around. Utility rebates vary by provider and change often, so check directly with yours for what is still available.