Will Solar Panels Increase Your Property Taxes in California?

2025 Homeowner’s Guide to Solar and Property Tax Rules — From Your Energy Pros

Adding solar panels to your home is one of the smartest ways to reduce energy bills, boost property value, and lower your environmental impact. But one common question we hear from homeowners across San Diego and Southern California is: “Will installing solar panels increase my property taxes?”

The short answer? In most cases—no. Thanks to a special property tax exclusion under California state law, residential solar energy systems are not subject to higher property taxes. In this 2025 guide, Your Energy Pros breaks down exactly how this works, who qualifies, and what it means for your long-term investment in solar energy.

California Revenue & Taxation Code Section 73: What You Need to Know

California’s Revenue and Taxation Code Section 73 was specifically designed to encourage solar adoption across the state. Under this law, homeowners who install qualifying solar energy systems receive a property tax exclusion—meaning the added value of the solar system is not assessed as part of your home’s taxable value.

This applies to system installation that is completed on or before January 1, 2027, as long as the system’s construction was started on or before January 1, 2026. While legislation may be extended, this current deadline makes now a critical time to lock in your exemption and maximize savings.

Key Facts About California’s Solar Property Tax Exclusion

1. It’s a Tax Exclusion, Not a Tax Exemption
While the terms sound similar, they have different meanings under California law. A tax exemption reduces or eliminates property taxes on certain portions of your home, often with income or residency restrictions. A tax exclusion, on the other hand, prevents new value from being added to the taxable portion of your property after an upgrade.

So when you install solar panels, their value is excluded from your home’s assessed value—which means your property tax bill doesn’t go up, even if your home’s resale value does.

2. It Covers More Than Just Solar Panels
The exclusion applies to a wide range of eligible equipment, including:

Photovoltaic (PV) solar panels
Solar water heating systems
Solar thermal electric systems
Solar-powered mechanical energy systems
Any other active solar energy system designed to collect, store, or distribute solar energy

3. Energy Storage and Supporting Equipment May Qualify
California’s tax code also includes key system components under the exclusion, such as:

Battery storage systems
Power conditioning equipment
Transfer switches and meters
Inverters and cabling
Electrical main panel upgrades

In fact, ducts and piping used jointly for solar and non-solar energy can still qualify for a partial exclusion of up to 75% of their value.

4. The Exclusion Applies to New Construction, Too
You don’t have to live in the property to benefit from this tax rule. California expanded the law in 2011 to clarify that:

Builders who include solar systems in new construction can apply for the exclusion
First homeowners can also apply for it if the builder did not claim the benefit
The exclusion cannot be double claimed—either the builder or the first buyer is eligible, not both

This is particularly valuable in solar-ready new developments across Southern California.

5. It’s Non-Transferable After a Sale
Once the property is sold, the exclusion no longer applies to the new owner unless:

The new owner installs a new qualifying solar system
The property is transferred under specific exempt conditions (e.g., between spouses)

Also important: if you profit from selling a solar-enhanced home, those profits may be subject to capital gains tax—so always consult a tax professional.

Real-World Impact: Solar Without the Tax Burden

The beauty of California’s exclusion is that it encourages investment in solar without penalizing homeowners with higher taxes. Consider this example:

A homeowner installs a $40,000 solar PV system with energy storage
Their home’s appraised value may increase—but the $40,000 is excluded from the property tax assessment
They save on monthly energy bills and avoid property tax increases

Combined with federal tax credits, utility rebates, and long-term energy savings, this creates an extremely favorable return on investment.

Other Solar Incentives to Know About in 2025

While the property tax exclusion is a huge benefit, it’s not the only financial incentive available. California homeowners may also be eligible for:

Federal Solar Investment Tax Credit (ITC) – Covers up to 30% of installation costs
State Incentives for Renewables and Efficiency – DSIRE (check https://programs.dsireusa.org/system/program/ca)
Local Utility Rebates – Programs from SDG&E and others for solar and battery integration

When combined, these incentives can offset a good percentage of total system costs, especially for homeowners in high-risk or disadvantaged areas.

Does Solar Always Increase Home Value?

In nearly all cases, yes. According to studies from Berkeley Lab and Zillow:

Homes with solar sell faster than non-solar homes
Buyers are willing to pay a premium of $15,000 or more for a solar-equipped home
Solar is increasingly seen as a must-have energy feature, especially among eco-conscious and tech-savvy buyers

And with California’s increasing electric rates, solar-equipped homes are even more attractive to prospective buyers.

What About Commercial Solar Installations?

Commercial and multifamily property owners may also qualify for tax exclusions and other incentives, though the structure and eligibility may vary. Your Energy Pros works with property managers, developers, and business owners to assess their options and implement cost-effective energy strategies.

How to Take Advantage of the Solar Property Tax Exclusion

Schedule a Free Energy Audit – We’ll evaluate your home’s energy profile and solar potential
Get a Detailed Proposal – Including estimated savings, installation cost, tax incentives, and payback timeline
We Handle the Paperwork – Including documentation to support your exclusion with the local county assessor
Monitor Long-Term Savings – With smart tools to track your solar production and home value impact

Your Energy Pros: Helping Californians Go Solar with Confidence

At Your Energy Pros, we don’t just install solar panels—we build long-term energy strategies. Based in La Mesa, we serve residential and commercial clients across San Diego County and Southern California.

We specialize in:

Property-specific solar and storage solutions
Maximizing rebates and incentives
Smart technology integration
Helping homeowners avoid unnecessary costs—including tax increases

Whether you’re in the planning phase or ready to break ground, our team is here to guide you every step of the way.

Get Expert Guidance Today

Solar upgrades don’t have to be complicated. With expert guidance and the right incentives, going solar is a smart financial move that improves your home’s efficiency, comfort, and long-term value.

Schedule your Free Energy Audit with Your Energy Pros today and find out how solar can work for your home—without raising your property taxes.

Disclaimer: This content is for informational purposes only and does not constitute legal or tax advice. Consult your tax advisor or county assessor’s office for the most current guidance on property taxation and solar installations.

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