Solar panels clearly add value to your home — research shows a 4% or higher increase in property value. But does that added value mean higher property taxes? For most homeowners, the answer is a welcome “no.”
Property Tax Exemptions for Solar
Over 35 states have enacted property tax exemptions specifically for solar energy systems. These laws prevent your local tax assessor from increasing your property’s assessed value due to a solar installation — even though the system genuinely adds market value.
This means you get the benefit of increased home value (important if you sell) without the burden of higher annual property taxes. It’s one of the best but least-discussed solar incentives.
States with Full Property Tax Exemptions
States offering complete exemptions from property tax for solar energy systems include Arizona, California, Colorado, Connecticut, Florida, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, New York, North Carolina, Oregon, Rhode Island, Texas, Vermont, Virginia, and others.
The specific terms vary — some exemptions last for the life of the system, others for a set period (commonly 15–20 years). Some cover 100% of the solar system’s value, while others cap the exemption at a certain dollar amount.
States Without Exemptions
A handful of states do not offer property tax exemptions for solar installations. In these states, a solar system could increase your assessed property value, leading to modestly higher property taxes. Even in these cases, the additional tax is typically small ($100–$300/year) compared to the electricity savings ($1,500–$2,000+/year).
How to Claim the Exemption
In most states, the exemption is automatic — your tax assessor simply excludes the solar installation from your property’s assessed value. In some jurisdictions, you may need to file a form with your county assessor’s office after installation. Your solar installer should be able to guide you on local requirements.
Impact on Home Sale
Here’s where it gets interesting: even though your property taxes don’t increase, buyers still recognize and pay for the value solar adds. Studies show solar homes sell for more and sell faster. So you benefit from higher market value without higher carrying costs — a rare financial double win.
The Bottom Line
In the vast majority of states, solar panels increase your home’s market value without increasing your property taxes. Combined with the federal tax credit, state incentives, and electricity savings, the property tax exemption makes the financial case for solar even stronger. Check your state’s specific rules on DSIRE (dsireusa.org) or ask your installer about local property tax implications.
