California’s Solar Tax Break Ends in 2027 Homeowners Who Buy or Finance New Solar Could Face Higher Property Taxes, While Leased Systems May Avoid the Same Tax Impact

California's Solar Tax Break Ends in 2027
Homeowners Who Buy or Finance New Solar Could Face Higher Property Taxes, While Leased Systems May Avoid the Same Tax Impact
For more than four decades, California homeowners who installed solar did not have to worry about it raising their property taxes. The state's active solar energy system exclusion, administered through county assessors and overseen by the California State Board of Equalization, kept the value of a qualifying solar system out of a home's assessed value. That protection is scheduled to end for new installations starting January 1, 2027.

How the exclusion works today
In California, new construction on a property can be added to its assessed value, which raises the property tax bill. Under the solar exclusion, a qualifying active solar energy system has been treated as an exception, so the homeowner's assessment does not go up because of the system. County guidance makes the deadline clear. A qualifying system must be completed before January 1, 2027. Construction still in progress on that date will not qualify and may be assessed as new construction. Systems that qualify keep the exclusion until the property changes ownership.

Who could see higher property taxes
The homeowners most directly affected are those who buy a new solar system, either with cash or with a loan, and complete it after the deadline. Because the homeowner owns the equipment, the added value of the system can become part of the home's assessment, potentially increasing the annual property tax bill for years to come.
For a homeowner weighing the cost of a purchased system, that ongoing tax increase is a new expense to factor into the long-term math.

Why leased and TPO systems may be different
With a lease or other third-party ownership arrangement, the homeowner does not own the solar equipment. The provider owns, installs, and maintains it, and the homeowner pays for the energy or service. Because the equipment is not the homeowner's property, a leased system may not increase the homeowner's own property assessment in the same way a purchased system could. Tax treatment can depend on the details of each agreement and on how your county assessor handles the system, so homeowners should confirm with their provider and their county assessor before signing anything. But for many families, third-party ownership may offer a way to get solar and battery storage without taking on new property tax exposure.

The benefits of solar and storage remain
Whatever happens with property taxes, the reasons homeowners on SCE, SDG&E, and PG&E go solar have not changed. Electricity rates have roughly doubled over the past decade, evening time-of-use prices are the most expensive of the day, and outages remain a concern. A solar and battery system lowers how much power you buy, covers expensive evening hours with stored energy, and keeps essential loads running when the grid goes down. Through third-party ownership programs, qualifying homeowners can get solar and battery storage installed without buying or financing equipment, while enjoying lower energy costs and backup power. The rules are changing on January 1. If you want solar without adding to your property tax worries, now is a smart time to find out whether your home qualifies.

To find out if your home qualifies for a TPO solar and battery program, visit myhomesolution.org/california_public_utility_commissions