If you’ve been thinking about adding solar to your home, this year could be more important than you realize.
Right now, California lets homeowners install a qualifying solar and battery system without increasing the taxable value of their home. That means you get the benefits of lower electric bills without paying higher property taxes because you made your home more energy efficient.
That benefit is scheduled to end on January 1, 2027, unless the state extends it. There has been talk about extending the program, but nothing has been approved yet. If you’re planning to go solar anyway, it makes sense to make your decision based on today’s rules—not on what might happen later.
Here’s why that matters.
Imagine you install a $50,000 solar and battery system. If your project qualifies before the exemption expires, that $50,000 is not added to your home’s assessed value. You get the savings from producing your own power, but your property taxes stay based on what your home was worth before the solar system was installed.
If the exemption goes away and nothing replaces it, future homeowners could end up paying property taxes on that additional $50,000. Using a typical California property tax rate of about 1.14%, that’s roughly $570 every year. Over 10 years, that’s about $5,700. Over 20 years, it’s around $11,400. The exact number depends on where you live, but the point is simple: those costs can add up.
The good news is that if you qualify while the exemption is still available, you lock it in. As long as you own the home, the value of your solar system stays excluded from your property’s assessed value under the current rules. That’s a benefit you can’t go back and claim later.
Most homeowners start looking at solar because they want to lower their SDG&E bill. That’s still the biggest reason. But avoiding future property taxes is another way solar can save you money over the long run. It’s one more reason to install the system when the timing is right instead of putting it off.
No one knows whether California will extend this exemption again. They might, and they might not. Waiting means leaving that decision in someone else’s hands. Moving forward now gives you certainty. You know what the rules are today, and you can take advantage of them while they’re still available.
If solar has been on your list, now is a good time to find out what your options look like. Even if you decide not to move forward right away, you’ll know exactly where you stand and whether installing before the deadline makes sense for your home.
This information is intended for general educational purposes only and should not be considered tax or legal advice. Please consult your tax professional regarding your specific situation.
