The New York All-Electric Building Act, signed by Governor Kathy Hochul in May 2023 as part of the Fiscal Year 2024 budget, requires most new buildings in the state to use electric systems for space heating, hot water, and clothes drying instead of natural gas, oil, or propane equipment. The mandate takes effect for building permit applications filed on or after January 1, 2026 for buildings seven stories or fewer, and January 1, 2029 for taller buildings and smaller commercial structures. It applies only to new construction. Existing homes and buildings are not touched.
What the Law Bans in New Buildings
The act prohibits fossil fuel combustion in new buildings for three specific uses: space heating, hot water, and clothes drying. A covered project cannot install a gas furnace, oil boiler, gas water heater, or gas clothes dryer.1New York State Assembly. All Electric Buildings
The ban reaches past the appliances. Builders cannot install the gas service lines or internal piping that would support those systems, and electrical panels must be sized to carry the full load of heat pumps, electric water heaters, and other equipment taking the place of gas-fired units. A covered building has to be physically incompatible with fossil fuel hookups from day one, not just left gas-free while the piping sits waiting.
Cooling systems are not addressed. Fossil fuel-based cooling barely exists in residential construction, so the law focuses on heating, hot water, and drying.
When the Mandate Starts and Who Is Covered
The rollout runs in two phases, keyed to the date the building permit application is filed:
- January 1, 2026 — new buildings seven stories or fewer, plus commercial buildings with 100,000 square feet or more of conditioned floor area.1New York State Assembly. All Electric Buildings
- January 1, 2029 — residential buildings over seven stories and commercial buildings under 100,000 square feet of conditioned floor area.1New York State Assembly. All Electric Buildings
What matters is the permit application date, not groundbreaking or completion. A seven-story residential project with a permit filed in December 2025 is not subject to the mandate. The same project filed in January 2026 is.
Only new construction counts. Renovations, repairs, and additions to existing buildings fall outside the law.1New York State Assembly. All Electric Buildings
Exemptions and Conditional Uses
The law carves out two categories: buildings fully exempt from the mandate, and buildings that may use fossil fuels for specific processes but still cannot burn gas or oil for heating or hot water.
Fully exempt: emergency and standby generators (so backup diesel or natural gas power is allowed in any building), manufactured homes, and certain agricultural buildings.1New York State Assembly. All Electric Buildings
Conditional use: commercial kitchens in restaurants, hospitals and medical facilities, laboratories, laundromats, car washes, crematoriums, and manufacturing facilities. A restaurant can install a gas range, but it still has to heat the space with electric equipment and produce hot water electrically. Buildings using this conditional path must be designed “electrification-ready,” with the electrical infrastructure in place so the remaining gas systems can be converted later.
The Grid-Capacity Waiver
One path exists around the mandate. If the local utility determines in writing that it cannot provide reliable electric service to the site within a reasonable timeframe, the project may install fossil fuel systems.1New York State Assembly. All Electric Buildings
The Public Service Commission sets the standards for this process. The determination has to come from the utility itself, not from the builder’s own judgment, and it is not something local building officials grant based on financial hardship. Developers who suspect the local grid cannot support a fully electric project need to engage the utility early and secure the written determination before the permit is approved.
If You Already Own a Home
Nothing in the act requires you to change anything in a building that already exists. You can keep your gas furnace, replace it with another gas furnace when it dies, and even build an addition that uses gas.1New York State Assembly. All Electric Buildings The mandate operates at the point of new construction permits. Retrofits, repairs, and additions are outside its reach.
How the Rule Is Enforced
Local building departments handle enforcement at two stages. During plan review, officials check mechanical, power, and fuel-gas specification sheets for prohibited equipment. At final inspection, the installed systems must match the approved plans before a certificate of occupancy is issued.
Violations are treated like any other building code violation under New York’s Uniform Fire Prevention and Building Code, with orders to remedy, potential court-ordered abatement, and penalties up to $1,000 per day. In practice, the certificate of occupancy is what makes the law stick. A noncompliant building does not get occupied until the equipment is right.
New York City Has Its Own Law
New York City passed Local Law 154 before the state act. LL154 bans fossil fuels in new buildings for space heating and hot water and also restricts fossil fuel-powered cooking ranges and domestic appliances, with its own timeline and enforcement run by the NYC Department of Buildings.2New York City Department of Buildings. Building Electrification (LL154)
Builders in the five boroughs may be subject to both laws, and the stricter requirement governs. The main practical difference is cooking equipment: LL154 covers it more broadly, while the state act allows conditional fossil fuel use in commercial kitchens.
Incentives for Building All-Electric
Several incentives help offset the higher upfront cost of heat pumps and electric equipment.
Federal Tax Credits with Short Fuses
The Section 45L tax credit lets builders claim up to $2,500 per qualifying energy-efficient home, or up to $5,000 per home meeting the Department of Energy’s Zero Energy Ready Home standards. The credit expires for homes acquired after June 30, 2026.3Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under Public Law 119-21
For commercial projects, the Section 179D deduction offers a per-square-foot deduction for buildings that hit energy efficiency targets. It is being repealed for projects that begin construction after June 30, 2026.3Internal Revenue Service. FAQs for Modification of Sections 25C, 25D, 25E, 30C, 30D, 45L, 45W, and 179D Under Public Law 119-21
The timing is tight. Builders working under the mandate in the first half of 2026 should coordinate with tax advisors now, because after June 30, 2026 these federal incentives are gone.
New York State Rebates
New York’s Clean Heat Rebate Program, run through utilities like NYSEG and RG&E, offers rebates up to $10,000 for air source heat pumps, up to $18,000 for ground source heat pumps, and up to $2,500 for heat pump water heaters.4NYSEG. NYS Clean Heat Rebate Program
Starting January 1, 2026, residential clean heat rebates are limited to homes with one to four units. Customers must be electric or combination gas-and-electric customers of a participating utility; gas-only customers are not eligible. The program is designed around replacing existing systems, so new construction projects should confirm eligibility with the local utility before counting on these rebates.4NYSEG. NYS Clean Heat Rebate Program
Legal Challenges to Watch
The state act has not been struck down and remains fully in effect, but similar laws elsewhere have run into federal preemption fights that could reach it eventually.
In 2023 the Ninth Circuit Court of Appeals struck down a Berkeley, California ordinance that banned natural gas piping in new buildings, holding that the federal Energy Policy and Conservation Act preempts local regulations that effectively prevent covered gas appliances from being used, even where the regulation targets the piping rather than the appliance.5Justia Law. CRA v City of Berkeley, No 21-16278 (9th Cir. 2023)
New York City’s LL154 faced a parallel challenge. In 2025, a federal district court in Manhattan reached the opposite conclusion, ruling that LL154 is not preempted because it regulates the type of fuel rather than appliance energy efficiency. That case is on appeal to the Second Circuit. The split between circuits means the U.S. Supreme Court may eventually weigh in, and the outcome could affect how the state act is treated. For now, the mandate is binding and should be planned around.