Does Adding Solar Increase Your Property Taxes in California?

Quick answer: Not today. California excludes the value of a qualifying active solar energy system from your property’s assessed value, so adding solar has not added its value to what you are assessed on. That exclusion has applied to lien dates from the 1999-2000 fiscal year through 2025-26, and it becomes inoperative on January 1, 2027 (California Board of Equalization, Letter To Assessors 2024/031, August 26, 2024). Systems completed before that date keep the exclusion. A system that broke ground in 2026 and is still under construction on that date does not. (Construction already in progress as of January 1, 2026 is treated differently; more on that below.) If you already have a qualifying system, it stays excluded until the property changes ownership.

A note on what this does and does not say: the exclusion keeps the system’s value out of your assessed value. It is not a guarantee about your total tax bill, which also moves with Proposition 13 inflation factoring, voter-approved bonds and direct assessments.

This is educational information, not tax advice. Property tax treatment depends on your county assessor and your specific facts. Talk to a qualified tax professional.

What the exclusion actually is

Section 73 of California’s Revenue and Taxation Code excludes an “active solar energy system” from the definition of “newly constructed.” Most improvements to a California home trigger a supplemental assessment: build a pool, add square footage, and the assessor adds that value to your assessed value, and your bill goes up. Solar has been the exception since 1999. The system’s value simply never gets added.

That is why the standard advice for more than two decades has been that solar does not add to what you are assessed on in California. The advice was correct. It has an expiration date.

What changed, and why it did not make the news

The exclusion was written with a sunset built in. The Legislature has extended it repeatedly. Senate Bill 710, chaptered October 3, 2025, made one adjustment worth being precise about: the January 1, 2027 date is now the date the exclusion becomes inoperative rather than the date it is repealed. The practical effect for a homeowner is the same. The wording matters if you are reading older guidance.

This year’s extension attempt was Assembly Bill 2389. It would have extended the exclusion for customer-sited systems. It cleared the Assembly Revenue and Taxation Committee 7 to 0 at its April 27 hearing. It was referred to Appropriations, placed on the suspense file, and on May 14, 2026 it was held under submission. There has been no action since, and the session adjourned August 31.

That is why there was no headline. Nobody voted the exclusion down. A bill stopped moving in a fiscal committee, which is how tax expenditures usually end in a tight budget year. The Assembly Appropriations analysis put the statewide cost of continuing the exclusion at roughly $21 million a year in property tax revenue, and noted that figure covers residential systems only.

The part that catches people: the test is completion, not contract

This is the detail that decides whether a homeowner is on one side of the line or the other, and it is almost never explained.

Board of Equalization guidance is explicit that construction in progress added during 2026 is not excludable if it is still in progress on January 1, 2027, because that work is not assessable until January 1, 2027, at which point the exclusion is gone. The same guidance says that if that construction is completed before January 1, 2027, the completed new construction is subject to supplemental assessment and may therefore be excluded under section 73.

One carve-out, for projects that started earlier. Construction already in progress as of 12:01 a.m. on January 1, 2026 did qualify on that lien date, and the Board’s own example treats that work as excluded even when completion slips past the sunset. In that scenario only the work added during 2026, and the base year value set at a completion after 2026, fall outside the exclusion. If you broke ground in 2025, that distinction is worth raising with your county assessor.

So the operative question is not when you signed a contract, when you paid a deposit, or when the permit was pulled. It is whether the system was finished before the calendar turned.

And here is the honest limit of what anyone can tell you. The Board of Equalization specifically declined to define completion for this purpose. Its letter says the question of when construction is complete is beyond the scope of that letter, and directs assessors to Property Tax Rules 463 and 463.500.

That means nobody should be telling you “you need permission to operate by December 31” or “you need your final inspection by December 31.” Those are guesses dressed up as rules. If your timeline is anywhere near the end of the year, the right move is to call your county assessor’s office and ask what event they treat as completion, then build margin into your schedule on top of the answer.

The federal half of this already happened

There were two solar incentives in play for California homeowners. The property tax exclusion is the state one. The federal one was the residential clean energy credit under Internal Revenue Code section 25D, worth 30 percent of qualifying costs.

It is gone. Per IRS Fact Sheet FS-2025-05, issued August 21, 2025, the section 25D credit is not allowed for any expenditures made after December 31, 2025. And the IRS applies the same logic California does: an expenditure is treated as made when the original installation of the item is completed.

Two different programs, in two different jurisdictions, both keyed to completion, one year apart.

A related credit, section 25C, covered energy efficient home improvements like windows, doors, insulation and heat pumps. It also ended for property placed in service after December 31, 2025. Note the different trigger: 25D turns on when installation was completed, 25C on when property was placed in service. Same cliff date, different test.

One live deadline attached to this. If you completed a qualifying installation during 2025 and you are on extension for your 2025 federal return, that return is due October 15, 2026. That is where a legitimately-2025 installation gets claimed.

A word of caution about checking this yourself. The IRS consumer FAQ page on these credits still displays the pre-repeal language, saying the credits apply to property placed in service before January 1, 2033. That page shows a last reviewed date of January 18, 2026, which is after the repeal. It has not been updated. If you look this up and find the 2033 dates, you have found a stale page, not good news.

What happens to the exclusion when you sell

If your system qualified before the cutoff, the exclusion survives. Board of Equalization guidance states that after the exclusion sunsets, any solar energy system previously excluded as new construction remains excluded from property tax until the property changes ownership. The BOE’s own analysis of SB 710 says the same thing in different words.

Read that last clause carefully. The exclusion ends at a change in ownership. Under BOE guidance, the exclusion generally does not carry over to a buyer.

For a homeowner planning to stay, that is a non-event. For a homeowner planning to sell in the next several years, it is a real piece of information, because a grandfathered exclusion is not something you can pass along as a feature of the house.

We are deliberately not going to describe the valuation mechanics at that point, because we could not source them to a primary document and this is not a place to guess.

Who this actually affects

Homeowners with an install in flight right now. This is the group with a live decision. The question is whether the schedule realistically lands completion in 2026, and whether the project still works if it does not.

Homeowners considering an install in 2027 or later. The math changed. Both the federal credit and the state property tax exclusion are off the table. That does not make solar a bad decision, it makes it a different calculation, and it should be run on current numbers rather than on what a neighbor experienced in 2023.

Homeowners who already have a qualifying system. Nothing to do today. The item to file away is the change-in-ownership point above, for whenever you sell.

Homeowners adding battery storage. Storage devices installed as part of a qualifying active solar energy system are inside the statutory definition, which references collection, storage and distribution of solar energy and lists storage devices among covered equipment. Whether storage added on its own, without solar, qualifies is not addressed in published Board of Equalization guidance that we could find. If that is your situation, ask your assessor rather than relying on an installer’s summary.

The honest section

A deadline is a reason to decide. It is not a reason to say yes.

If solar did not pencil for you on its own numbers, the loss of a property tax exclusion does not change that, and neither does the loss of a federal credit. Those incentives were always the margin, not the case. Anyone using December 31 as a closing tool is selling urgency, and urgency is not a financial argument.

The Assembly Revenue and Taxation analysis of AB 2389 offers a sense of scale for what the exclusion is worth annually. Citing EnergySage pricing, it noted the cost of a 9.13 kilowatt system, the average size in California, is less than $23,000, and applying the 1 percent constitutionally limited property tax rate to that figure produces an increased annual property tax of less than $230.

Treat that as what it is: a committee staff illustration at the bare 1 percent base rate on a marketplace price. Actual California tax rates commonly run above 1 percent once voter-approved bonds and direct assessments are included, and an assessed amount grows under Proposition 13 factoring over time. It is a useful order of magnitude. It is not a number to plan around, and it is certainly not a reason to rush a five-figure purchase.

Separately, California’s own programs, including the Self-Generation Incentive Program and net billing, are administered by different agencies under different rules than either federal income tax credits or county property tax assessment. They are a separate question from anything in this article.

If you own a California home with solar, or you are weighing an install this quarter, the two questions worth answering are what your county assessor treats as completion, and whether the project works without the exclusion. Both are worth a conversation before you sign anything.

If you want to think this through with someone who is not selling you a system, that is what a no-pitch review is for. You can request a no-pitch equity review, and we will tell you plainly when the answer is to do nothing.

Not ready to talk to anyone yet? You can check what your California home is worth first, then decide.

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Written by Kiyoshi Inui: NMLS 1173299
California Mortgage Strategist, Solve Lending & Realty