California's Solar Property Tax Exclusion Is Expiring After 2026
For 25 years, California homeowners who installed solar didn't have to worry about their property taxes going up. That's about to change.
The state's solar property tax exclusion, which prevents solar energy systems from triggering a property tax reassessment, expires January 1, 2027. Two separate legislative efforts to extend or soften the impact failed in the latest session, and the actual deadline to qualify is tighter than most people realize.
Here's where things stand and what it means if you're considering solar.
October 2026 | 7-minute read | Property Tax, Solar Incentives, SB 710, Installing Solar
This post covers time-sensitive legislation. Last updated October 1, 2026. If you're reading this later, verify current status before making decisions.
What the Exclusion Does
Under California Revenue & Taxation Code §73, installing a solar energy system is excluded from the definition of "newly constructed" for property tax purposes. In plain terms: adding solar panels to your home increases its market value, but your county assessor doesn't factor that increase into your property taxes.
On a typical residential solar installation, this exclusion saves homeowners hundreds of dollars per year for every year they own the home. Over 20+ years of ownership, that adds up to thousands.
This has been the law in California since 1999. For most of that time, homeowners didn't need to think about it and would still benefit. That changes in 2027.
What Happened, and What Didn't
The exclusion was always written with a sunset date. The current sunset is the 2026–27 fiscal year, meaning it applies to systems meeting eligibility requirements before the January 1, 2027 lien date.
Assemblymember Jacqui Irwin introduced AB 2389 to extend the exclusion for customer-sited systems sized 10 kW or smaller, covering lien dates through January 1, 2031. The California Solar & Storage Association (CALSSA) made it a top legislative priority.
The bill was held under submission in Assembly Appropriations on May 14, 2026, effectively killed on the suspense file.
A second bill, SB 1329 (McNerney), would have established a uniform valuation methodology for solar energy systems across all 58 counties. It passed the Senate 27-11 but was withdrawn by its author in early August amid opposition from county assessors. It did not restore the residential exclusion, but its failure means there are also no statewide rules governing how counties will value new solar installations going forward.
No legislation passed this session to extend, replace, or soften the property tax exclusion for residential solar.
If You Already Have Solar: You're Protected
If your solar system was installed and received Permission to Operate (PTO) before January 1, 2027, you're covered, even after the exclusion sunsets.
SB 710, authored by Senator Catherine Blakespear, was signed into law on October 3, 2025 (Chapter 328, Statutes of 2025). It amends R&TC §73 to ensure that systems qualifying for the exclusion before January 1, 2027 continue to be excluded until there is a change in ownership of the property.
In other words: if your system qualifies under the current deadline, the exclusion stays with you for as long as you own the home. You don't lose it when the broader program sunsets.
SB 710 protects existing solar homeowners. What it does not do is extend the exclusion to new installations after 2026.
The Real Deadline: PTO, Not Installation
Here's the detail that matters most.
The exclusion applies to systems that are complete and operational before the January 1, 2027 lien date. That doesn't mean panels on your roof. It means your system has received Permission to Operate (PTO) from your utility, the formal interconnection approval that allows the system to generate and export power.
Installation is not the finish line. PTO is.
The gap between installation and PTO is significant. Most residential solar projects take 6–12 weeks from signed contract to PTO, depending on system complexity, permitting timelines, and utility interconnection backlogs.
Working backward from December 31, 2026, homeowners who want to qualify for the exclusion need to be entering into a contract with an installer now. At this point, the timeline is tight, and there is very little buffer remaining for permitting delays, equipment availability, or utility interconnection backlogs.
What Happens If You Miss the Deadline
If your system receives PTO on or after January 1, 2027, the installation is treated as "new construction" under California property tax law. Your county assessor will include the system's value in your property's taxable base.
What does that cost? That depends on how your county assessor values the system, and that question is still being worked out.
The worst-case scenario is that your county values the system at what you paid for it. On a $30,000 solar installation, at California's average effective property tax rate of roughly 1.1%, that works out to approximately $330 per year in additional property taxes, roughly $6,600 over 20 years of ownership. With a solar-plus-battery system at $45,000–$50,000, the annual impact climbs to $500–$550 per year, over $10,000 across 20 years.
A more favorable outcome is possible. CALSSA is pushing county assessors and the State Board of Equalization to use a comparable sales approach, valuing the system based on its impact on home resale value rather than construction cost. Under this methodology, the assessed value could be closer to $10,000, resulting in approximately $110 per year in additional taxes. With depreciation factored in, that could drop further.
Either way, the assessment is permanent and annual. It doesn't go away after a few years. It continues until the property is sold and reassessed. And the exclusion doesn't phase out. It's a cliff. A system that receives PTO on December 31, 2026 qualifies. A system that receives PTO on January 2, 2027 does not.
Where Things Stand Now
The 2026 legislative session ended August 31 without any bill extending or replacing the property tax exclusion for residential solar. Both legislative paths failed:
- AB 2389 (Irwin), the bill to extend the residential exclusion, was held under submission in Assembly Appropriations on May 14, 2026. It did not advance.
- SB 1329 (McNerney), which would have established a uniform valuation methodology for solar systems across all 58 counties, was withdrawn by its author in early August before reaching the Assembly Appropriations Committee. Opposition from county assessors and county representatives over departures from market-based appraisal standards proved too strong.
No legislation passed this session that extends, replaces, or softens the property tax exclusion for systems installed after 2026.
The conversation has now shifted from the Legislature to the county assessors and the State Board of Equalization. CALSSA is engaged at the administrative level, pushing for fair valuation methods, particularly a comparable sales approach for residential systems rather than basing the tax on what the homeowner paid for the system. The outcome of those discussions will determine the actual dollar impact for homeowners who miss the deadline (see above).
Third-party owned systems (leases and PPAs) will also be subject to property tax after 2026.
Final Take
The solar property tax exclusion has been one of California's most valuable solar incentives, saving homeowners hundreds of dollars a year without requiring a single form or application. The Legislature had two chances to extend or replace it this session. Both failed.
After 2026, new installations will be subject to property tax. The exact dollar amount will depend on how county assessors choose to value systems, a question that's now being worked out at the State Board of Equalization. If you already have solar, SB 710 has you covered. Your exclusion stays in place as long as you own the home.
If you're considering solar, the math works with or without the exclusion. But the window to qualify is closing fast. At this point, there is very little margin for delay if you want to receive PTO before January 1, 2027.
Questions about the property tax exclusion or whether your timeline still works? Get in touch for a free, no-pressure consultation.
Boden Energy Solutions
A dedicated community member known for his extensive volunteer work throughout the town, Tyler founded Boden Energy Solutions with a clear mission: to empower homeowners with personalized solar solutions. Leveraging a decade of specialized experience in photovoltaic solar and energy storage, Tyler's approach goes beyond simple sales, prioritizing a consultative process that ensures clients understand and benefit from their investment.