Do solar panels increase property taxes in California?

The short answer, stated the way the statute states it

Revenue and Taxation Code section 73(a) provides that the term “newly constructed,” as used in Article XIII A of the California Constitution, “does not include the construction or addition of any active solar energy system, as defined in subdivision (b).” (Rev. & Tax. Code §73(a), leginfo.legislature.ca.gov, verified 2026-09-17.)

The State Board of Equalization states the effect in one sentence: “When an active solar energy system is installed, it is not assessed, meaning that the existing assessment will not increase.” (BOE, Active Solar Energy System Exclusion FAQ, verified 2026-09-17.)

Why “exclusion” and not “exemption” is the whole point

BOE is explicit and the distinction is load-bearing: “The property tax incentive for the installation of an active solar energy system is in the form of a new construction exclusion. It is not an exemption. Therefore, the installation of a qualifying solar energy system will not result in either an increase or a decrease in the assessment of the existing property.” (BOE, verified 2026-09-17.)

Read the second half. An exemption would remove value from the roll. An exclusion leaves the existing assessment where it was. Nothing about section 73 lowers a property tax bill, and any offer that implies it does is describing something the statute does not do.

How the assessment would otherwise work

BOE describes the default: “Generally, when something of value is physically added to real property, the addition is assessed at current market value and this value is added to the existing base year value of the real property.” (BOE, verified 2026-09-17.)

BOE Letter to Assessors No. 2024/031 also notes that because “newly constructed” is defined by Revenue and Taxation Code section 70 to include any addition to real property, it includes construction in progress. (BOE LTA 2024/031, 26 August 2024, verified 2026-09-17.)

So the mechanism being switched off is the addition of new value to the base year value. That is why the exclusion shows up as nothing happening on the assessment rather than as a line item or a refund.

What counts as an “active solar energy system”

Section 73(b)(1) defines it as a system that “uses solar devices, which are thermally isolated from living space or any other area where the energy is used, to provide for the collection, storage, or distribution of solar energy.” Section 73(b)(3) lists the permitted uses: domestic, recreational, therapeutic or service water heating; space conditioning; production of electricity; process heat; and solar mechanical energy. (Rev. & Tax. Code §73(b), verified 2026-09-17.)

BOE’s page lists what it does not include: solar swimming pool heaters, hot tub heaters, passive energy systems and wind energy systems. Section 73(b)(2) is the statutory basis for the first two: “‘Active solar energy system’ does not include solar swimming pool heaters or hot tub heaters.” (BOE; Rev. & Tax. Code §73(b)(2), verified 2026-09-17.)

BOE answers the pool question directly in its FAQ: roof-mounted panels installed to heat swimming pool water are not an active solar energy system for this purpose. (BOE FAQ, verified 2026-09-17.)

On storage, section 73(d)(1)(B) provides that “[a]n active solar energy system that uses solar energy in the production of electricity includes storage devices, power conditioning equipment, transfer equipment, and parts related to the functioning of those items,” and that such a system “includes only equipment used up to, but not including, the stage of conveyance or use of the electricity.” (Rev. & Tax. Code §73(d)(1)(B), verified 2026-09-17.) That text describes storage as part of a qualifying solar electric system. Standalone storage installed without solar is not addressed here — ask the county assessor. Storage programs are a separate subject from assessment: the SGIP battery category guide.

Leased and PPA systems — what BOE says

BOE addresses this in its FAQ, in the “Leases and Ownership” section, answering a homeowner who financed a system with a capital lease and then received a tax bill after the leasing company reported the system as machinery and equipment on a Business Property Statement. BOE’s answer: “No. The system is excluded whether it is leased or owned.”

In the related commercial question BOE states the principle generally: “Ownership of the system is not a condition of exclusion. Further, there are no specific use requirements for the energy produced by the system to qualify for the exclusion.” The same answer notes that a system would be classified as a fixture, and therefore real property, if it meets the tests of Property Tax Rule 122.5, and would be excluded from the definition of new construction if it meets the definitions of section 73. (BOE FAQ, verified 2026-09-17.)

Two practical points follow. First, an assessment appearing on a leased or third-party-owned system is the kind of thing BOE tells homeowners to raise with the county: the same FAQ directs that “[i]f you think you have been assessed for the installation of an active solar energy system, you should contact your County Assessor.” Second, a lease or PPA carries its own separate costs, which have nothing to do with property tax and are not reduced by this exclusion. What third-party ownership actually is: solar PPA versus lease in California.

There is no form to file — with one exception

BOE: “No. There is no form or filing required to receive the exclusion. The Assessor usually discovers the installation of the active solar energy system by means of the building permit that was taken out.” (BOE FAQ, verified 2026-09-17.)

The exception is buying a new home from a builder. Section 73(e)(1) extends the exclusion to “the initial purchaser who purchased the new building from the owner-builder,” but only if the owner-builder did not already receive an exclusion for the same system and only if the purchase happened before the building became subject to reassessment to the owner-builder. Section 73(e)(1)(A) requires the initial purchaser to “file a claim with the assessor” and to identify the value attributable to the system and the amount of any rebate provided by the CPUC, the Energy Commission, an electrical corporation, a local publicly owned electric utility or any other state agency. (Rev. & Tax. Code §73(e), verified 2026-09-17.)

BOE’s FAQ names the form — the “Initial Purchaser Claim for Solar Energy System New Construction Exclusion” — says it should be mailed to the County Assessor, and says the builder can supply the value of the system and any rebates or tax credits the builder received. BOE’s FAQ also gives the timing trap: if the builder was fully assessed on the lien date following completion, the later purchaser is not eligible, because the builder received the exclusion as of the lien date. (BOE FAQ, verified 2026-09-17.)

Section 73(e)(1)(A)(i) adds a claim deadline: a claim “shall be considered timely if it is filed within three years of the date of purchase,” with a late but otherwise valid claim applied beginning on the lien date of the assessment year in which it is filed — and clause (ii) states that those provisions “shall become operative on January 1, 2027.” (Rev. & Tax. Code §73(e)(1)(A)(i)–(ii), verified 2026-09-17.)

The exclusion ends at the next change in ownership

Section 73(f): “Notwithstanding any other law, the exclusion from new construction provided by this section shall remain in effect only until there is a subsequent change in ownership.” (Verified 2026-09-17.)

Section 73(e)(1)(C) says the same thing about the initial-purchaser extension: it “shall remain in effect only until there is a subsequent change in ownership of the new building.”

A change in ownership is its own reassessment event. The exclusion protects the assessment from being increased by the addition of the system; it does not travel to the next owner. With a lease in place at the sale, see selling a California home with a solar lease or PPA.

1 January 2027 is a completion deadline

Section 73(i)(1): “Except as provided in paragraph (2), this section shall remain in effect only until January 1, 2027.” Section 73(i)(2) preserves what has been granted: systems “that qualify for an exclusion under this section prior to January 1, 2027, shall continue to be excluded on and after January 1, 2027, until there is a subsequent change in ownership.” (Verified 2026-09-17.)

The statute also carries an apparently conflicting date in subdivision (g): “This section applies to property tax lien dates for the 1999–2000 fiscal year to the 2025–26 fiscal year, inclusive.” BOE addressed the conflict directly in Letter to Assessors No. 2024/031 (26 August 2024), maintaining that “the section 73 new construction exclusion applies to any active solar energy system new construction in progress or completed before January 1, 2027,” and that after the sunset “any solar energy system previously excluded as new construction will remain excluded from property tax until the property changes ownership.” The same letter cautions that this “should not be taken to mean that all construction in progress, including those added after January 1, 2026 and before January 1, 2027, qualify for the exclusion,” because completed new construction is assessable on the lien date and on the day of completion. (BOE LTA 2024/031, verified 2026-09-17.)

Section 73 was last amended by SB 710 (Stats. 2025, Ch. 328), approved 3 October 2025, effective 1 January 2026. The Legislative Counsel’s Digest describes it as making “a technical change … by instead making the repeal date of January 1, 2027, the date the exclusion becomes inoperative.” (SB 710, verified 2026-09-17.)

BOE’s own history in LTA 2024/031 records that the sunset has been extended repeatedly since 1980. A legislature that has extended a date seven times may extend it again. Check the current statute text, not a summary — including this one.

What to do if you think you were assessed in error

1. Get the assessor’s notice and identify exactly what was added to the roll.
2. Contact the county assessor. BOE publishes a listing of county assessors and directs homeowners there.
3. If the system is leased and a leasing company reported it as business personal property, note BOE’s answer that “[t]he system is excluded whether it is leased or owned,” and that the real property appraiser should coordinate with the business property auditor-appraiser when a permit is issued.
4. If you bought a new home from a builder, ask whether the builder already claimed the exclusion and whether the “Initial Purchaser Claim” form applies to you.
5. For anything with a tax consequence, use a qualified tax professional and the assessor, not a sales estimate.

Incentives and assessments belong in different columns — which California program does what — and an exclusion does not remove the costs covered in the cost lines that arrive after the quote.

A referral request is optional and separate

California Rate Relief is a private referral service. A referral request does not determine an assessment, establish program eligibility, approve financing or promise a price, savings figure or tax outcome. Property tax questions belong with the county assessor and your own tax professional.

Frequently asked questions