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Pennsylvania is the only state in the Northeast with zero solar tax benefits. No property tax exemption, no sales tax exemption, no state credit. Your solar system actually increases your property tax bill. Here is exactly what it costs and how to mitigate it.
No Property
Tax Exemption
6% Sales Tax
On Equipment
No State
Tax Credit
Based on a typical 12.81 kW PA solar system at $3.00/W.
PA charges 6% sales tax on solar equipment with no exemption. On a $38,430 system, this adds $2,306 to your day-one cost.
Solar panels add to your assessed home value. At PA's ~1.2% average effective property tax rate, a $38,430 system adds approximately $461/year. Over 25 years: $11,525.
Pennsylvania offers no state solar tax credit, rebate, or incentive. Combined with the expired federal 25D ITC ($0), PA homeowners get zero tax credits from any government level for a cash/loan solar purchase.
Sales tax ($2,306) + property tax over 25 years ($11,525). This is money PA homeowners pay that NJ, MA, CT, and RI homeowners do not.
Every neighboring state provides better solar tax treatment than Pennsylvania.
| State | Property Tax | Sales Tax | State Credit | Grade |
|---|---|---|---|---|
| Pennsylvania | NO Exemption | 6% (NO Exemption) | None | F |
| New Jersey | 100% Exempt | 0% (Exempt) | None (has SREC-II) | A |
| Massachusetts | 100% Exempt | 0% (Exempt) | $1,000 max | A |
| Connecticut | 100% Exempt | 0% (Exempt) | None | A- |
| Rhode Island | 100% Exempt (20 yr) | 0% (Exempt) | None (has REF rebate) | A |
| New Hampshire | Local Option (~66%) | 0% (No sales tax) | None (repealed) | B+ |
Pennsylvania
-$13,831
Tax penalty
New Jersey
$0
Full exemptions
PA's negative tax treatment adds approximately 1.5-2 years to the solar payback period compared to neighboring states. A system that would pay back in 8 years in NJ takes about 10 years in PA due to the sales tax and ongoing property tax increase.
You cannot change PA tax law, but you can structure your solar investment to minimize the impact.
Avoid ~$11,500+ in property tax over 25 years
With a PPA or lease, the third-party company owns the system, so it is NOT added to your property assessment. You also avoid the $2,300 sales tax (the company pays it). The company claims Section 48 ITC (30%) and passes savings as a lower rate. In PA, this is often the best financial strategy specifically because of the negative tax treatment.
Reduce or eliminate property tax increase
Some PA boroughs and townships assess solar at a lower value than installation cost. You can appeal the assessment to argue that solar adds less value to your property than the cost of the equipment. Success varies by municipality and county assessment office.
Higher annual savings offset tax penalty faster
A slightly oversized system generates more net metering credits and SREC income, which helps recover the tax penalty faster. The property tax increase is based on the initial cost, but net metering savings grow with utility rate escalation.
Delay assessment until next cycle
PA assessments do not update continuously. If you install near the end of an assessment cycle, you may delay the property tax increase by 1-2 years. Check with your county assessor for reassessment schedules.
Spreads cost but does not eliminate tax impact
PACE financing adds the solar cost to your property tax bill as a special assessment. This does not avoid the property tax increase from the solar value, but it eliminates upfront cost and the 6% sales tax is included in the financing.
PA's negative tax treatment makes third-party ownership uniquely attractive.
In states with full tax exemptions (NJ, MA, CT, RI), cash/loan ownership is clearly better for long-term ROI. But in PA, the ~$13,800 in 25-year tax penalties significantly narrows the gap between ownership and PPA/lease. When you add that PPA/lease providers still access the 30% Section 48 ITC (unavailable to homeowners), PPA/lease often provides better risk-adjusted returns in PA.
The PRESS Act would raise the solar carve-out from 0.5% to 5.5%, boosting SREC prices dramatically. However, it does NOT include property tax or sales tax exemptions. It would improve solar ROI but not address the tax penalty.
Pending in LegislatureNo active legislation as of February 2026 to create a property tax exemption for solar in PA. Multiple prior bills have been introduced but none have passed. PA's local assessment system makes a statewide exemption complex to implement.
No Active BillYes. Pennsylvania has NO property tax exemption for solar. When you install solar panels, your home's assessed value increases by the cost of the installation. At PA's average effective property tax rate of ~1.2%, a $38,000 system would add approximately $460/year to your property tax bill. This is a significant negative unique to PA vs neighboring states (NJ, MA, CT, RI all exempt solar from property tax).
No. Pennsylvania charges 6% sales tax on solar equipment and installation. There is no exemption. For a typical 12.8 kW system costing $38,430 before tax, the sales tax adds approximately $2,306. Combined with the lack of property tax exemption, PA is the worst state in the region for solar tax treatment.
New Jersey provides both 100% property tax exemption and 100% sales tax exemption for solar. PA provides neither. For a comparable $38,000 system, a NJ homeowner pays $0 in extra property tax and $0 in sales tax, while a PA homeowner pays approximately $460/year in added property tax plus $2,306 upfront in sales tax. Over 25 years, PA homeowners pay approximately $13,800 more in taxes than NJ homeowners for the same solar system.
Yes. With a solar PPA (Power Purchase Agreement) or lease, the third-party financing company owns the panels, not you. Since you do not own the equipment, it is not added to your property tax assessment. This is one of the main reasons PPA/lease is particularly attractive in PA. The financing company also absorbs the 6% sales tax.
No. Pennsylvania has no state solar tax credit, state solar rebate, or any state-level financial incentive for residential solar. The only financial benefits are net metering (1:1 retail credit), SRECs ($22-35/MWh), and utility-specific programs. There is no state equivalent of the federal ITC (which also expired Dec 31, 2025).
Yes. PA homeowners can appeal their property tax assessment through their county Board of Assessment Appeals. You would argue that the solar installation adds less value to your home than the installation cost (for example, because the technology depreciates rapidly or because the resale value premium is less than the cost). Success varies significantly by county.
In PA, sales tax applies to the materials and equipment but generally not to the labor portion of a solar installation if it is separately stated on the invoice. However, many installers provide a single price that includes both materials and labor. Ask your installer to itemize materials vs labor to potentially reduce the sales tax amount.
The PRESS Act (PA Renewable Energy Standard Strengthening) would raise the solar carve-out from 0.5% to 5.5%, which would boost SREC prices significantly. However, it does not include any property tax exemption or sales tax exemption provisions. A separate legislative effort would be needed to address PA's negative solar tax environment.
We factor in PA's sales tax, property tax impact, and lack of state credits so you see the real payback. No inflated projections. We help you choose the right financing structure to minimize tax impact.