Do solar panels increase property taxes in California in 2026?

California's Active Solar Energy System (ASES) exclusion, codified in Revenue & Taxation Code §73, means a rooftop solar installation adds $0 to your home's assessed value for property tax purposes. With SB 710's October 2025 extension, that protection now runs through January 1, 2036 — so a system installed today is covered for its entire productive life under current law.

Last verified: August 2026 by Helios Energy Global.

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How the exclusion actually works

California property tax is based on assessed value, which is normally reassessed when you make a significant improvement to your home. Solar panels clearly improve a home — they can add meaningful market value — but the legislature carved out a specific exception decades ago to encourage adoption.

Under R&TC §73, a qualifying Active Solar Energy System is excluded from the definition of "new construction" for property tax purposes. That means the county assessor does not add the system's value to your assessed base. Your tax bill stays the same the day after installation as it was the day before.

The California Board of Equalization (BOE) administers and publishes guidance on this exclusion. Their published FAQ confirms the exclusion applies to systems installed on existing homes and, separately, to new construction through a parallel provision.

What counts as a qualifying system?

The BOE defines an Active Solar Energy System as equipment that uses solar energy to:

• Heat or cool a structure
• Generate electricity (photovoltaic panels — by far the most common residential use)
• Heat water for use in the structure
• Provide solar process heat

Standard rooftop PV panels with or without battery storage qualify. The battery itself may also qualify if it is charged primarily by the solar system — the BOE guidance covers "storage devices" as part of an integrated solar energy system.

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SB 710: What changed in October 2025

The original ASES exclusion was not permanent. It had been extended multiple times by the legislature, and without action it would have expired. SB 710, signed into law in October 2025, extended the exclusion through January 1, 2036.

Key mechanics of the extension:

• No new application required for systems already installed and already excluded.
• Systems installed between now and January 1, 2036 automatically qualify under the extended exclusion.
• The legislature retains the option to extend again before 2036 — the pattern of extensions going back decades suggests strong political durability, though no future extension is guaranteed.

Provision	Detail
Governing law	California R&TC §73
Extension signed	October 2025 (SB 710)
Current exclusion expires	January 1, 2036
Administering agency	California Board of Equalization (BOE)
Property tax rate context	California base rate 1% of assessed value + local bonds/levies (typically 1.1%–1.3% total)
Typical system value excluded (estimate)	$15,000–$30,000 installed value
Estimated annual tax savings (estimate)	~$165–$390/yr at 1.1–1.3% effective rate
Applies to leased systems?	Yes — exclusion is property-based, not owner-based
Applies to new construction?	Yes — separate but parallel provision under R&TC §73

Cost estimates based on typical Southern California residential installs at ~$2.40–$3.25/watt installed. Tax savings are illustrative estimates only; your actual rate depends on your county and local bond measures.

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What happens when you sell your home?

This is the question we get most often, and the answer is good news for sellers and buyers alike.

The exclusion transfers with the property. When you sell a home with solar panels, the buyer inherits the exclusion — the solar equipment does not get added to the new owner's assessed base simply because of the sale. The BOE's change-of-ownership rules treat the excluded solar equipment as continuing to be excluded in the new owner's hands.

However, there is an important nuance introduced by the way California's change-of-ownership reassessment works:

• The land and structure of the home will be reassessed at market value when it changes hands (unless a specific exclusion like a parent-child transfer applies).
• The solar system's value does not get added on top of that reassessment — it remains excluded.
• But because the overall home is reassessed at sale, the buyer's new tax base will reflect the home's current market value (which likely includes some premium buyers attribute to solar). The exclusion prevents the county from separately adding the solar equipment's assessed value — it does not prevent the market from pricing solar into the sale price.

Practical takeaway: Selling a solar home does not create a special solar property tax penalty for your buyer. The exclusion carries forward cleanly.

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Leased systems and third-party-owned panels

If you have a solar lease or power purchase agreement (PPA) — where a company like a third-party financier owns the panels on your roof — the exclusion still applies to your property. The BOE's guidance is clear: the exclusion is attached to the real property, not to the ownership of the equipment.

This matters because:

• You, the homeowner, do not get a property tax increase even though you don't own the panels.
• The leasing company owns personal property (the panels), which is subject to personal property tax assessed to them — not to you.
• When you sell, the lease or PPA transfers to the buyer, and the exclusion continues.

If you're weighing a lease versus an owned (cash or loan) system, property taxes are not a differentiating factor. The bigger differences are savings over time and what happens under NEM 3.0 — which affects SCE, PG&E, and SDG&E customers but not LADWP customers, who remain on retail-rate net metering.

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Southern California specifics: does your utility change anything?

The property tax exclusion is a state law — it applies identically whether you're in SCE territory in the San Gabriel Valley, an LADWP customer in Los Angeles, or served by a municipal utility like Pasadena Water & Power, Burbank, Glendale, or Anaheim.

Where your utility does matter is in how much money your solar system saves you on your electric bill — which affects how quickly the system pays back its cost:

• SCE customers pay approximately 34–35¢/kWh on average, with a 4–9 PM peak TOU window. Under NEM 3.0 (the CPUC Net Billing Tariff), export credits are lower than retail, making pairing solar with a battery especially valuable.
• LADWP customers pay approximately 22¢/kWh on average and still receive retail-rate net metering — exports are credited at close to what you'd pay to buy power. This is a meaningfully better export deal than NEM 3.0. See our NEM 3.0 explainer for the full comparison.

The property tax exclusion doesn't care about any of this — but your payback period does. Get a custom design and savings estimate to see the numbers for your specific address and utility.

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What about SGIP battery rebates in 2026?

The Self-Generation Incentive Program (SGIP) offers rebates for home batteries in California, but residential SGIP budgets are waitlisted in 2026 — not actively available. We mention this because some homeowners assume a rebate will offset battery costs; right now, you should not count on SGIP money in your near-term budget. Check our batteries page for the latest program status.

Also worth noting: the 30% federal residential solar tax credit expired December 31, 2025. There is no federal income tax credit for a solar system purchased in 2026. Any quote or sales pitch that implies otherwise is outdated or inaccurate.

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Frequently asked questions about solar and property taxes in California

Will my county assessor automatically apply the exclusion, or do I have to file something?

In most California counties, the assessor applies the exclusion automatically when a building permit is pulled for a solar installation. Some counties may require you to file a simple form. Check with your county assessor's office after installation — the BOE publishes a county-by-county assessor directory. There is no fee to claim the exclusion.

Does the exclusion apply to a brand-new home being built with solar already installed?

Yes. R&TC §73 covers both retrofits and new construction. A builder who installs solar as part of a new home's construction can exclude the solar system's value from the initial assessed value of the property. This is the "new-construction exclusion" provision of the same statute.

My home went up in value after I installed solar — does that mean my taxes went up because of solar?

Not directly. The exclusion prevents the assessor from adding the solar system's assessed value to your tax base. However, if a county reassessment occurs for another reason (e.g., you pulled a permit for a room addition at the same time), your overall assessed value could increase. Solar itself is excluded; other improvements are not.

I'm an SCE customer — does NEM 3.0 affect the property tax exclusion?

No. NEM 3.0 is a utility billing rule that affects how your solar export credits are calculated. It has no connection to property tax law. The exclusion applies to all qualifying systems regardless of which utility serves your home or which net metering tariff you're on.

What if I add a battery to an existing solar system — is that also excluded?

Generally yes, if the battery is charged primarily by the solar system and is part of an integrated Active Solar Energy System. The BOE's guidance includes storage devices as qualifying equipment. Confirm with your county assessor for your specific installation, as configurations vary.

Does the exclusion cover solar carports or ground-mounted systems, not just rooftop panels?

The exclusion covers Active Solar Energy Systems as defined by the BOE — the physical location (roof vs. ground vs. carport) is not the determining factor; what matters is that the system generates solar electricity or thermal energy for the property. Ground-mounted and carport systems that meet the definition generally qualify, but confirm with your assessor for non-standard configurations.

What happens to the exclusion if SB 710 isn't extended again before 2036?

If the legislature does not act before January 1, 2036, new systems installed after that date would no longer be automatically excluded. Systems already installed and already excluded before that date would retain their excluded status — the exclusion doesn't retroactively disappear for existing systems. Given the exclusion has been extended repeatedly since the 1980s, most policy observers expect further extensions, but no future legislative action is guaranteed.

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Next steps

• Book a free consultation and custom design — we'll show you exactly what a system costs, what it saves, and how the numbers work for your address and utility.
• See solar panel cost ranges for Southern California — current installed pricing with no fluff.
• Understand your savings under NEM 3.0 vs. LADWP net metering — the utility you're on changes the math significantly.
• Learn whether adding a battery makes sense for your home — especially relevant for SCE customers under NEM 3.0.
• Explore our Southern California service locations — we serve Santa Monica, Los Angeles, the San Gabriel Valley, and surrounding communities.
• See our full solar guide — system sizing, equipment, and what to expect from the installation process.