Quick answer: California’s solar property tax exclusion (Revenue and Taxation Code Section 73) becomes inoperative on January 1, 2027. A home solar or battery system that passes final inspection before that date stays excluded from reassessment until the home changes ownership. A system completed on or after January 1, 2027 gets its value added to your assessed value, which at a typical 1.1% tax rate means roughly $130 to $550 more per year depending on system size. As of September 2026, no extension has passed.
Key takeaways
- The deadline is completion, not the day you sign. Your system needs its final inspection before January 1, 2027.
- Systems that qualify keep the exclusion until you sell. Nothing changes for them in 2027.
- AB 2389, the 2026 extension bill, was held in the Assembly Appropriations Committee on May 14, 2026 and did not pass.
- A battery installed as part of your solar system is covered by the same exclusion.
- After 2027, only the solar system’s value is added to your assessment, never your whole home.
Here is what I tell every homeowner who calls us this fall: the date that matters is not the day you sign a contract. It is the day the city inspector signs off on the finished system. In most California cities those two dates sit weeks apart, and this year that gap decides whether your solar is property tax free for as long as you own your home.
We have installed solar across California for over 30 years, through every extension of this law since the early days. This is the first time in a long while that nobody in Sacramento is lining up a rescue. Below is exactly how the rule works, what it costs if you miss it, and whether you can still make it.
When does California’s solar property tax exclusion expire?
The exclusion becomes inoperative on January 1, 2027. The California State Board of Equalization confirmed the date in Letter to Assessors No. 2026/034, sent to every county assessor on September 1, 2026.
That letter also cleared up a common misread. SB 710, signed in 2025, did amend Section 73, but only to change the wording from “repealed” to “inoperative” on January 1, 2027. It did not move the date. According to the BOE, any system already excluded “will remain excluded from property tax until the property changes ownership.”
The law itself goes back to 1980, when voters passed Proposition 7 and gave the Legislature power to keep solar out of the definition of “new construction.” It has been extended several times since. This is the first sunset in years with no extension attached.
Timeline of California’s active solar energy system exclusion
| Date | What happened |
|---|---|
| 1980 | Proposition 7 lets the Legislature exclude active solar systems from new construction assessment |
| 2008 | AB 1451 extends the exclusion to the first buyer of a new home with builder-installed solar |
| September 2022 | SB 1340 pushes the sunset from January 1, 2025 to January 1, 2027 |
| 2025 | SB 710 and AB 1516 amend Section 73; the January 1, 2027 date stays |
| May 14, 2026 | AB 2389, the proposed extension, is held in Assembly Appropriations |
| September 1, 2026 | BOE Letter to Assessors 2026/034 confirms the January 1, 2027 end date |
| January 1, 2027 | Exclusion becomes inoperative for newly completed systems |
Source: California State Board of Equalization, LTA 2026/034 and BOE Active Solar Energy System Exclusion.
Will the solar property tax exclusion be extended?
Not as of September 28, 2026. The one live extension bill, AB 2389 by Assemblymember Jacqui Irwin with Senators Jerry McNerney and Catherine Blakespear, would have extended the exclusion for customer-sited systems. It cleared the Revenue and Taxation Committee 7 to 0 in April, then was held under submission in Assembly Appropriations on May 14, 2026. The Legislature’s 2026 session ended without it moving again.
The 2025 attempt went the same way. SB 710 started as an indefinite extension. According to the BOE’s bill analysis, September 2025 amendments stripped the new exclusion out and kept the January 1, 2027 end date.
Why the resistance? Money for counties. When Governor Newsom signed the 2022 extension, he warned that the policy “has a direct impact on property tax revenues that support essential services at the local level.” Kern County, home to large utility-scale solar farms, objected that the exclusion shifts costs onto other property owners.
My honest read: a 2027 bill could bring some version back, and the industry will push for it. But nobody should plan a purchase around a bill that has not been written yet. Plan around the law that exists.
What counts as “completed” for the solar property tax exclusion?
Your system counts as completed on the date it is available for use, which assessors tie to the final inspection by your city or county building department. That standard comes from Property Tax Rule 463.500, the BOE rule that sets the date of completion for all new construction.
So panels on the roof are not enough. If the crew finishes on December 20 and the inspector cannot come until January 6, your system was completed in 2027. A system still under construction on January 1, 2027 does not qualify and is assessed as new construction.
Your utility’s Permission to Operate (PTO) is a separate step from the building final. Assessors work from permit records, but I tell customers to aim for both before the holidays. December inspection calendars fill up fast, and a failed inspection needs a re-visit.
Solar property tax outcome by situation, California 2026 to 2027
| Your situation | Property tax outcome |
|---|---|
| System passed final inspection in 2026 or earlier | Excluded until the home changes ownership |
| Installed in December 2026, final inspection in January 2027 | Assessed as new construction |
| Contract signed in 2026, installed in 2027 | Assessed as new construction |
| Battery added in 2027 to a pre-2027 solar system | Original solar stays excluded; the new battery is likely assessed (confirm with your assessor) |
| You sell or transfer a home with excluded solar | Exclusion ends; buyer’s purchase price sets the new assessed value |
| First buyer of a newly built home with builder-installed solar | May claim the exclusion on Form BOE-64-SES |
Sources: BOE LTA 2026/034, Property Tax Rule 463.500.
How much will solar add to my property tax after 2027?
Figure about 1.1% of the system’s assessed value per year. That is California’s 1% base rate under Proposition 13 plus voter-approved debt, which the Legislative Analyst’s Office puts at about 0.1% statewide on average. Your exact rate depends on your county’s tax rate area.
Only the solar is added. Under Property Tax Rule 463, new construction gets its own base year value for “only that portion of the property which is newly constructed.” Your house is not reassessed because you added panels.
Estimated added California property tax from a solar system completed in 2027 or later
| Assessed system value | Example system | Added tax, year 1 (1.1%) | 20-year total (ceiling) |
|---|---|---|---|
| $12,000 | 5 kW, low end of CA pricing | $132 | $2,640 |
| $20,000 | 7 kW, mid-range | $220 | $4,400 |
| $24,000 | 10 kW, low end | $264 | $5,280 |
| $32,500 | 10 kW, high end | $358 | $7,150 |
| $50,000 | Large solar plus battery | $550 | $11,000 |
System values use NRG’s current California solar cost range of $2.40 to $3.25 per watt. Tax rate per the LAO. The 20-year column holds the value flat; the assessor’s value may be lower than your contract price, so treat it as an upper bound.
Worked example. A San Jose homeowner on PG&E buys a 7 kW system for about $20,000. If the final inspection lands on December 18, 2026, the system adds $0 to the tax bill for as long as they own the home. If it slips to January 12, 2027, they owe roughly $220 more every year, or about $4,400 over 20 years.
Now the honest part. $220 a year is real money, but it does not break solar economics in California. Payback on a purchased system here still runs about 5 to 7 years on electricity savings alone. Do not let a date push you into a rushed design or an installer you have not vetted. A bad system costs far more than the tax.
Do solar batteries, leases and PPAs qualify?
Batteries: yes, when they are part of the solar system. Section 73(d) states that a solar system producing electricity “includes storage devices, power conditioning equipment, transfer equipment, and parts related to the functioning of those items” (BOE LTA 2026/034, statute text enclosed). A Tesla Powerwall 3 or Enphase IQ Battery 5P installed with your panels and inspected before January 1, 2027 is excluded along with them. A standalone backup battery charged only from the grid is a gray area. Ask your county assessor before you count on it.
If you have been putting off a battery, this is the year to decide. Under NEM 3.0, PG&E, SCE and SDG&E pay a fraction of retail for exported solar, so storage is often what makes the math work. Our solar battery cost guide breaks down current installed prices.
What does not qualify: solar pool heaters and hot tub heaters are excluded by name in Section 73(b)(2).
Leases and PPAs. With a lease or power purchase agreement, the solar company owns the equipment, so the exclusion question belongs to the owner, not you. For systems that go in after January 1, 2027, read the contract for a property tax pass-through clause before you sign. The trade-off runs the other way on federal credits: leases and PPAs can still capture the commercial 48E credit, which purchased systems lost at the end of 2025. We compare the options in our solar lease vs buy vs PPA guide.
How do I claim the solar property tax exclusion?
If you are adding solar to a home you already own, you do nothing. Your city or county sends the permit and final inspection record to the assessor, and the exclusion is applied automatically. Keep your permit card, final inspection sign-off and invoice in one folder. If a supplemental tax bill arrives that includes your solar, call the assessor’s office with those documents.
Buying a resale home that already has solar? The exclusion does not come with it. It ends at the change of ownership, and your purchase price, solar included, sets your new assessed value. Many older guides tell resale buyers to file a claim form. That form does not apply to them.
Buying a brand-new home with builder-installed solar? You are the one case that files paperwork. The first buyer submits Form BOE-64-SES, the Initial Purchaser Claim for Solar Energy System New Construction Exclusion, to the county assessor. Starting January 1, 2027, AB 1516 adds a deadline: file within 3 years of purchase, or relief applies only from the year you file forward (BOE LTA 2026/034).
Is there a California solar tax credit in 2026?
No. California has no state solar income tax credit, and the 30% federal residential credit (Section 25D) expired for systems installed after December 31, 2025, according to the Congressional Research Service. If your system was installed in 2025, you can still claim it on your 2025 return.
That leaves the property tax exclusion as the biggest state-level solar break still on the books, and it is the one with a hard end date. For the full list of what remains, including SGIP battery rebates and municipal net metering in LADWP and SMUD territory, see our California solar tax credit guide.
California solar incentives, property tax vs income tax, September 2026
| Incentive | How it saves you money | Status |
|---|---|---|
| Property tax exclusion (Section 73) | Keeps solar value out of your assessed value every year you own the home | Ends for systems completed on or after January 1, 2027 |
| Federal 25D residential credit | 30% of purchase price, once | Expired for systems installed after December 31, 2025 |
| Federal 48E (via lease or PPA) | Solar company claims it and prices it into payments | Available |
| California state solar income tax credit | None | Not offered |
Can I still get solar completed before January 1, 2027?
If you sign in early October, usually yes. If you sign after mid-November, it gets tight, and any honest installer should tell you so before you sign. At NRG, our current average from signed contract to final inspection is [NRG TO CONFIRM: X weeks], and we will tell you on the quote whether your install can finish in 2026.
Every residential job moves through the same five steps. Work backward from December 31:
- Site survey and design. Roof measurements, shading, and a check of whether your main electrical panel needs an upgrade. A panel upgrade adds $2,500 to $4,500 and can add utility coordination time.
- Permit. Many California cities now issue standard residential solar permits online the same day. Others still review plans by hand. Our California solar permit guide covers what to expect.
- Installation. Most homes take 1 to 3 days on the roof. Battery installs can add a day.
- Final inspection. This is the date that counts for property tax. Book it the moment the crew finishes, because December calendars fill up and holiday closures shrink them further.
- Permission to Operate. Your utility’s approval to turn the system on. Separate from the property tax test, but you want it before the new year too.
Five questions to ask any installer this fall
- What is your current average from contract to final inspection in my city?
- Do you pull the permit, or do I?
- Who schedules the final inspection, and how fast?
- If the final inspection slips into 2027 because of your delay, what happens?
- Is your license active on the CSLB license lookup? (NRG Clean Power: CA license #1026168.)
See if your install can finish in 2026. Get a quote in 2 minutes or book a virtual consultation. We serve homeowners across California, from San Diego to Sacramento, with solar and battery storage installs.
FAQ
When does the California solar property tax exclusion end? It becomes inoperative on January 1, 2027. Systems that pass final inspection before that date stay excluded from reassessment until the property changes ownership, per BOE Letter to Assessors 2026/034.
My solar was installed in 2023. Will my property tax go up in 2027? No. Any system that qualified before January 1, 2027 keeps the exclusion until you sell or otherwise transfer the home.
Do solar panels increase property taxes in California? Not for systems completed before January 1, 2027. Systems completed after that date add their assessed value to your property tax base, typically about 1.1% of that value per year.
Does a solar battery increase property taxes in California? A battery installed as part of your solar system and completed before January 1, 2027 is excluded, because Section 73 counts storage devices as part of the system. A battery added in 2027 or later will likely be assessed.
Does the solar exclusion transfer when I sell my house? No. The exclusion ends at the change of ownership, and the buyer’s purchase price, including the solar, sets the new assessed value.
Is AB 2389 going to extend the exclusion? Not this year. AB 2389 was held in the Assembly Appropriations Committee on May 14, 2026 and did not pass before the 2026 session ended. A new bill could be introduced in 2027, but none has passed