New Jersey Solar Incentives, Tax Credits & Rebates (2024 Guide)
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New Jersey offers five solar incentives to help make going solar more affordable. Learn how to maximize your savings in our guide.
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New Jersey has introduced several solar incentives over the past 12 years to help expand its statewide clean energy development. Two of its top incentives are the federal solar credit and its state net metering policy. The federal credit helps reduce initial solar installation costs, and net metering offers additional long-term savings on energy bills. For a standard 10 Kw solar system, solar incentives in New Jersey can save you over 8,000$. According to our survey of 1,000 homeowners, 78% of solar buyers took advantage of solar incentives.
We researched statewide and local programs targeted for residential solar installation. Our guide outlines the top solar incentives in New Jersey, details their potential savings, and provides information on how to apply for each program.
What Solar Tax Credits and Rebates Does New Jersey Offer?
New Jersey has emerged as a front-runner in solar power adoption since 2012. It ranks No. 9 in the country for total solar installations, according to the Solar Energy Industries Association (SEIA). State officials have also committed to sourcing 35% of its energy from renewable sources by 2025 and 50% by 2030.
The Garden State offers several statewide tax exemptions and incentives for residential solar panel system installations to encourage solar growth. Here is a breakdown of available programs:
| Incentive | Type | Where It Comes From | What It Provides |
|---|---|---|---|
| Federal solar tax credit | Tax credit | Federal | Claim up to 30% of solar system costs on federal taxes |
| Net metering | Bill credit | State | Receive bill credits in exchange for excess generated energy |
| Property tax exemption | Tax credit | State | Exemption from paying property taxes for a system purchase |
| Solar sales tax exemption | Tax credit | State | Exemption from paying state sales tax for a system purchase |
| Successor Solar Incentive (SuSI) Program | Renewable energy credit | State | Provides sellable energy credits for generated solar energy |
Can You Qualify for a Federal Solar Tax Credit in New Jersey?
Yes, New Jersey homeowners can qualify for the federal solar credit, which offers additional solar savings. This program was formerly known as the Solar Investment Tax Credit (ITC) and was extended in 2022 under the Inflation Reduction Act. It’s now known as the Residential Clean Energy Credit and allows homeowners to claim up to 30% of their solar installation costs on their federal taxes. The 30% credit lasts until 2032, dropping to 26% in 2033 and 22% in 2034.
This isn’t a refund or a cash-back payment. Instead, you’ll receive a tax credit that reduces or eliminates your federal tax liability. You can apply the credit balance to the next tax year if you owe little to no taxes. You can claim solar panels, inverters, solar batteries, electric vehicle (EV) chargers, and mounting equipment costs.
You must be the legal owner of your solar system to qualify. Certain methods of solar financing, including cash payments and solar loans, grant you legal ownership. Selecting a solar lease or power purchase agreement (PPA) disqualifies you from incentives because the solar company retains system ownership, reducing your potential savings. Keep this in mind when selecting a finance option.
Of the 1,000 homeowners who switched to solar in the last three years, 64% said they took advantage of the federal solar tax credit.
Does New Jersey Offer Net Metering?
The New Jersey Board of Public Utilities (NJBPU) requires net metering from investor-owned utilities, electric cooperatives, and municipal utilities. This program allows you to receive credits on your electric bills in exchange for the excess energy generated by your solar panels. Per NJBPU regulation, New Jersey residents will receive a credit equal to one kilowatt-hour (kWh) of electricity at the full retail rate for every kWh of excess solar energy generated. New Jersey is among the few states that haven’t switched to a wholesale rate credit for its net metering program, offering higher compensation for its homeowners.
New Jersey has a deregulated electricity market, which means separate companies control different steps from power generation to delivery. This allows homeowners, especially those with renewable energy systems, to choose a retail provider for their net metering program. Jersey Central Power & Light and PSE&G offer two of the best net metering programs.
Approximately one-third of our survey respondents said they’re part of a net metering program to save money on energy costs. Check with your local utility provider or the NJBPU website for which programs you’re eligible for.
Other Ways To Save on Solar in New Jersey
New Jersey offers additional incentive programs, including solar rebates and tax incentives to help extend your solar savings. We detail each incentive below.
Installing a solar system helps boost your home’s value and energy efficiency. In fact, the National Renewable Energy Laboratory (NREL) reports that your property value increases by $20 for every $1 your monthly energy bills decrease. Typically, you’d pay more property tax for this additional home value, but New Jersey homeowners are eligible for a property tax exemption for their solar system installation. This means you benefit from the increased property value without having to pay additional taxes.
Residents who buy a solar energy system won’t have to pay the 6.625% New Jersey state sales tax on their purchase. For example, if your solar energy system costs $21,000 total, you’ll save $1,391. This policy applies to ground-mount and rooftop solar installations. Check the Database of State Incentives for Renewables and Efficiency (DSIRE) for more details on New Jersey’s sales tax exemption.
The Successor Solar Incentive (SuSI) program functions similarly to renewable energy credit (REC) programs in other locations. A REC represents the amount of renewable energy a resident’s system produces. Homeowners can sell RECs for monetary payment based on market value. Solar renewable energy certificates (SRECs) provide a payout for each megawatt-hour (mWh) of electricity generated.
New Jersey’s current SuSI Program, SREC-II, offers one energy credit for every mWh your solar system generates. Specifically, the Administratively Determined Incentive (ADI) Program offers credits for net-metered residential solar projects. Other state SREC programs have fluctuating payout rates, but the New Jersey program is fixed at $85 per credit.
How Much Do Solar Panels Cost in New Jersey?
New Jersey solar panels cost an average of $14,671 before applying solar incentives. The federal solar credit alone could help you save over $4,401 on your system. These costs are for a 5-kilowatt (kW) system and can increase with a larger installation. Below are estimated savings for several New Jersey solar projects.
| System Size | Average Cost | Cost After Federal Tax Credit |
|---|---|---|
| 5 kW | $14,671 | $10,260 |
| 6 kW | $17,649 | $12,355 |
| 7 kW | $20,591 | $14,414 |
| 8 kW | $23,533 | $16,473 |
| 9 kW | $26,474 | $18,532 |
| 10 kW | $29,416 | $20,591 |
How Do You Apply for Solar Incentives in New Jersey?
We recommend discussing available solar incentives with your installer and reviewing the application process for each program. We’ve provided more details about each application process below.
You can apply for this credit after your solar panel installation by completing and filing IRS Form 5695 and submitting it during the next tax season. We recommend working with a tax professional for assistance with completing the form. You can also find comprehensive instructions on the IRS website.
The NJ-BPU website provides a full list of participating utility companies and application forms. You can also contact your utility company for application and program details.
You can apply through New Jersey’s Clean Energy Program website after completing your solar system installation. Applications are accepted on a first come, first served basis, and there are a limited number of spots available each year.
You need to apply for a certificate from your local assessor to claim an exemption. The certificate will adjust your property’s assessed value to exclude the value of your renewable energy system. The New Jersey Division of Taxation offers an Application for Certification of Renewable Energy Systems on its website.
You can claim this exemption by submitting Form ST-4 (Exempt Use Certificate) to your solar company during purchase.
New Jersey Solar Companies We Recommend
We spent more than 60 hours researching local and nationwide providers. These are our top recommendations for New Jersey’s best solar companies:
- Momentum Solar: Blue Raven Solar provides a variety of solar products, allowing homeowners to create their ideal solar system.
- Solar Energy World: Solar Energy World is a highly experienced solar installer, offering skilled, NABCEP certified installers.
We recommend requesting quotes from at least three solar companies to find the best pricing and system options.
Is Going Solar in New Jersey Worth It?
Yes, solar panels are worth it in New Jersey. The state’s renewable energy policies and ambitious energy goals make it an excellent location for solar users. New Jersey also receives ample sunlight year-round, with approximately 206 sunny days throughout the year.
Moving to solar could significantly reduce energy bills for most homeowners. As of December 2023, New Jersey residents paid an average electricity rate of 17.59 cents per kWh, exceeding the national average of 15.73 cents per kWh. Investing in solar energy helps offset those high electricity costs by reducing dependency on traditional electricity sources. Switching to solar could potentially save you 43%–63% on your monthly bills.
We recommend taking advantage of the state’s net metering, SRECs, and tax exemption options to maximize your savings. You should also apply for the federal solar credit and state incentives. Your selected financing option affects your eligibility for these incentives, so consider your options carefully before deciding. Work with your solar installer to verify your eligibility and apply for incentives as early as possible.
FAQ About New Jersey Solar Incentives
Can you get free solar panels in NJ?
No, New Jersey doesn’t offer free solar panels. However, several solar incentives and tax credits are available to reduce your investment costs. This includes the Successor Solar Incentive (SuSI) Program, and various tax exemptions.
What is the New Jersey solar tax credit for 2024?
New Jersey residents qualify for up to 30% of their installation costs with the federal solar tax credit. This credit applies toward your federal tax liability at tax time to help reduce or eliminate your owed taxes.
Does New Jersey offer solar incentives?
Yes, New Jersey offers several solar incentives, such as SRECs, net metering, and tax exemptions for energy system purchases. Homeowners must legally own their solar system to qualify for most incentives. Of our 1,000 survey takers, 86% said they took advantage of solar incentives to save money when switching to solar energy.
Does New Jersey have a state tax credit for solar?
No, New Jersey doesn’t offer a state solar tax credit. However, it offers state incentive programs and tax exemptions to make converting to solar more affordable. Eligible residents can apply for the federal solar tax credit for additional savings.
Our Rating Methodology
We are committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:
- Solar equipment, installation, and services (25%)
- Warranty and performance guarantees (25%)
- Brand reputation and certifications (15%)
- Financing options (15%)
- Experience (10%)
- Availability (10%)
Total scores are divided by 20 for a final 5-point rating scale.
To share feedback or ask a question about this article, send a note to our Reviews team at reviews@thisoldhousereviews.com.
