Updated Jan 10, 2023
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All states differ in the number of solar incentives they offer for home and commercial businesses. And while New Jersey isn’t the most solar-friendly state, it does offer a few exemptions when you install a solar system for your New Jersey home. In this detailed guide on New Jersey solar incentives, rebates, and tax credits, we cover the benefits of going solar and the tax rebates and incentives in place for doing so.
New Jersey is pushing to become more solar-friendly, and its current incentives, paired with the federal ones, can help New Jersey homeowners make solar possible.
The Garden State gets plenty of sunshine most of the year, but it costs between $15,000 to $32,000 for solar panel installation. So, New Jersey homeowners are having a tough time justifying the cost of a new solar system. However, the high electric rates and the electricity-draining hot summers and cold winters are good reasons many New Jerseyians are going solar.
Now is the time to take full advantage of the generous federal tax incentive before it reduces at the end of 2023. Plus, if you sell your NJ home, the PV system increases your property’s value without adding extra property taxes.
Besides the electricity and money savings, solar is a great way to go green and reduce your environmental impact. Plus, making your own electricity in New Jersey puts the power in your own hands.
Solar costs in New Jersey vary depending on your home’s energy requirements, the size of the system, and the installation costs. Most New Jersey homeowners pay between $15,000 to $32,000.
New Jersey doesn’t have the best solar rebates and incentives compared to other states. However, there are a few programs like the TRECs and tax exemptions. With the New Jersey rebates, exemptions, etc., you can save thousands of dollars on a solar system.
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New Jersey doesn’t have a state-level solar incentive, but you can still decrease costs with federal incentives and local rebates. Most New Jersey homeowners save several thousand on a new solar system with federal rebates, tax exemptions, and other credits. Besides federal solar programs, New Jersey residents can save with local initiatives and rebates.
|Federal Solar Tax Credit (ITC)||New Jersey residents are eligible for the Federal Solar Tax Credit and receive a rebate of 30% applied to their next federal tax return. If your solar panel system costs $25,000, you can get a credit for $7,500 when you file your taxes. But, you have to pay the full price upfront.||December 31st, 2032|
|New Jersey Solar Tax Incentive||New Jersey does not charge sales tax on the material costs and installation of PV systems.||None|
|Net Metering||Net metering lets homeowners use their excess solar energy as a credit on their next electric bill. Most New Jersey power companies offer this to homes and businesses, but it is usually a partial credit.||None|
|TRECs||Transition Renewable Energy Certificates (TRECs) are solar power rebates homeowners and businesses can receive for solar energy production. The rate is $91.20 for homes and $152 for businesses per megawatt-hour.||2035|
|New Jersey Property Tax Incentive||Property taxes do not increase when you install solar panels. As long as you own your home, your property taxes won’t increase from the added value of a solar panel system.||None|
Before purchasing a renewable energy system, do thorough research. Sometimes, you have to follow specific steps to get the full benefit of a rebate, incentive, or credit. So, you must follow all requirements to save the most money.
All 50 states, including New Jersey, are eligible for the Federal Solar Investment Tax Credit (ITC). This program gives homeowners a significant discount on their next federal tax return. The program currently provides a 30% tax credit on the cost of your solar system installation. You pay for the solar energy system upfront and out of pocket, then the IRS pays you back 30% of the total value of your new system when you file your federal taxes. The only downside is that you have to come up with the total price upfront, but you will get it back in a little over a year or less.
This Federal Solar Investment Tax Credit has been extended through the end of 2032 as a provision of the Inflation Reduction Act. This means that consumers in all states have access to this rebate program for another decade.
While New Jersey does not offer a tax credit, unlike states including California, it does provide a state sales tax exemption on the purchase price of your solar system. Since New Jersey’s sales tax is normally 6.625%, you immediately save this on installation. However, this isn’t a rebate or refund; it isn’t charged to you. This sales tax exemption can save you over $1,000, depending on the total solar system cost.
Along with the sales tax exemption, New Jersey also provides a property tax exemption. As you might expect, a solar system increases the overall value of your home. And an increase in your home’s value would normally mean an increase in your property taxes, too, since it is based on a percentage. But, in New Jersey, solar systems are exempt from property taxes. For example, if your home’s value was $500,000 before solar and $525,000 after solar, your property taxes will still be based on $500,000 (not $525,000).
New Jersey has a generous net metering policy. Net metering allows you to return your excess power to the power grid. Then, you can use that surplus as a credit to lower your power bill. Let’s say your home uses 700 kWh in one month, but your solar energy system produces 1,100 kWh. In that case, the extra 400 kWh will be exported to the grid. Then, when you get your energy bill for the month, you’ll receive a credit of 400 kWh. Depending on your power company, municipality, or utility company, you may only get partial credit.
Along with its tax exemptions, New Jersey offers residents and businesses additional incentive programs on solar systems with Transition Renewable Energy Certificates (TRECs). TRECs replaced SRECs (Solar Renewable Energy Certificate) in May 2020 and are based on how much electricity your home’s solar system generates. Here are the basics of how TRECs work:
If your New Jersey home produces ten megawatt-hours (10,000 kWh) of solar generation in a year, you will receive ten renewable energy credits or TRECs at $912.00.
It is often less difficult for large businesses in New Jersey to get energy savings incentives and set up a net metering policy. Geothermal, PV systems, and other energy efficiency improvements/additions have high installation costs, leaving quite the potential for savings.
There are no specific solar incentives for nonprofit organizations in New Jersey. However, the state offers a 100% subsidized energy audit for nonprofit agencies to help them become more energy efficient. However, it is important to note that nonprofits and businesses are still eligible for the Federal tax incentive.
The Rural Energy for America Program (REAP) from the United States Department of Agriculture assists agricultural producers in converting to renewable energy sources. It helps businesses secure loans for clean energy sources, including solar. The business has to supply its contact information to the USDA to get help with loan financing.
Besides agricultural producers, small rural businesses are also eligible for REAP’s resources for installing or upgrading renewable energy sources. Businesses that qualify for REAP don’t have to negotiate their funding. Instead, the business just supplies its solar project plan to the USDA, and it provides the available grants.
Businesses in New Jersey that install a solar panel system receive a 30% federal tax credit when they file their taxes. If the business invests in a large solar system, this tax incentive can result in tens of thousands in savings.
The Federal Solar Tax Credit is the best way for homeowners and businesses to save money on solar power. Luckily for home and business owners, this program is set to extend through 2032.
As with residents, New Jersey also offers businesses savings on solar systems with TRECs. Like residential solar systems, TRECs for commercial solar systems are based on how much electricity the business creates. However, the credit is higher at $152 per megawatt-hour or energy. Since businesses generally support more solar capacity, these TRECs can stack up quickly.
Compared to some other states, New Jersey has some catching up to do with the solar incentives it offers. But, installing a photovoltaic system is a major decision that will keep providing savings yearly. And with solar power becoming more affordable in the United States, there is hope that new incentives will make it even more appealing to New Jerseyans. However, to get full advantage of the federal tax incentives, you must install a system before it expires.
Yes, solar is worth it in New Jersey. The state has many solar incentives that make going solar a smart investment. Plus, a home solar system can drastically reduce your electricity bill, but coming up with the upfront capital to pay for one can be challenging. In that case, solar loans, tax exemptions, rebates, net metering programs, and the ITC can be helpful.
How much your electricity bill will go down with solar in New Jersey depends on the size of your solar system, how much sunlight your location gets, and your current electricity rates. However, most homeowners see an average electric bill savings of at least 50%. Some homes can even offset their electricity usage completely in the summer months.
Solar panel system prices in New Jersey vary widely depending on the size of your home, how much sunlight your location gets, and the type of solar panels you choose. However, the average cost of a 5kW solar panel system in New Jersey is around $18,000 before any incentives.
No, you cannot get solar panels for free in New Jersey. However, several solar incentives can make going solar much more affordable. The most popular incentive is the Federal Solar Tax Credit, which offers a 30% tax credit for the total cost of your solar installation.
The solar rebates available in New Jersey include the Federal ITC rebate (26% of the purchase price) and TRECs. TRECs are based on how much electricity your solar system produces and are currently worth $91.20 and $152 per megawatt-hour for homes and businesses, respectively.
As of 2022, there are over 157,000 individual solar installations in New Jersey. However, it is impossible to determine what percentage of this is homes versus businesses and solar facilities. However, this number has been snowballing in recent years as solar costs have fallen, and more people are aware of the environmental and financial benefits of going solar.
No, solar panels don’t increase property taxes in New Jersey. The state offers a Property Tax Exemption for solar panel systems. The solar system will increase the value of your home, but the additional value will be exempt from your property tax calculation.
The amount you can write off for solar panels on your taxes in New Jersey depends on the solar incentive you are eligible for. The most common incentive is the Federal Solar Tax Credit, which offers a 30% tax credit for solar panel systems for homeowners and for businesses alike.
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