Massachusetts Solar Incentives (Rebates, Tax Credits & More in 2023)

In the chart below, we’ll provide a comprehensive list of all of the incentives for photovoltaic (PV) (solar) equipment available to Massachusetts homeowners. We’ll also explain how each of these perks can affect your system price and long-term savings in the following sections.

What Do Massachusetts Residents Need to Know About the Federal Solar Tax Credit?

The federal solar investment tax credit (ITC) is currently the best solar incentive available in Massachusetts, in our opinion. The credit was established in 2005 and has since undergone some important changes. Originally offered at 30% of your system total, the credit dropped to 26% in the early 2020s. It was scheduled to drop again to 22% and phase out entirely in 2023.

Thanks to the Inflation Reduction Act, the federal government extended the credit and increased the rate back to 30% in August 2022. The new rate schedule is as follows:

• The credit rate will be 30% for systems installed between 2022 and 2031
• The credit rate will drop to 26% in 2033
• The credit rate will drop to 22% in 2034
• The credit will no longer be available in 2035

Based on the average system total of $19,110 in Massachusetts, you can expect your credit value to hover around $5,733, credit values might differ for individuals and calculating your IRA return is the ideal way to get a better estimate. This estimate assumes the local average cost per watt of $2.94 for the typical 6.5 kW system required in the Bay State.

How to Claim the Federal Solar Credit in Massachusetts

Filing for the federal credit is a breeze, which makes this incentive all the more worthwhile. You can follow the steps below to ensure you get the most out of the credit.

• Step 1: When you’re ready to file your taxes for the year you installed your system, print out IRS form 5695. This is the form for reporting residential energy credits to the federal government. If you use TurboTax or H&R Block software, you should be able to complete the form online.

• Step 2: Fill out the form using the documentation you get from your solar installer. You’ll need basic information like the value of your system, the brands of equipment installed, where the system is installed and the contact information for your solar system installation company. The form should take no longer than a few minutes to fill out, provided you have all of the required information handy.

• Step 3: When you file your taxes, make sure to submit the completed form along with your filing or send it to your accountant to submit.

EcoWatch’s Opinion on the Federal ITC in Massachusetts

Massachusetts is home to quite a few highly beneficial solar incentive programs, but we believe the federal credit offers the greatest benefit. It takes just a few minutes to file for, and the average Bay Stater will get a credit of $5,733 on their taxes. If you only file for one perk in Massachusetts, we recommend you make it this one.

It’s important to understand exactly how this incentive works, as not all solar customers will be able to take the full credit amount. The credit gets applied to your income tax liability, so if you don’t owe any taxes, you won’t see any benefit from this perk.

However, you can roll over any remaining credit to future tax years, and you can do that for up to five years. This means you can take the entire credit if you expect to owe at least $1,150 per year in taxes for the next five years.

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What You Need to Know About the Massachusetts Income Tax Credit

The Massachusetts income tax credit is a state credit that works just like the federal credit. The credit is for 15% of your entire system value, which gets applied to your state income tax liability for the year you install your system.

While Massachusetts offers a credit of up to 15% of your system total, the program is capped at $1,000 per household. Given that 15% of the average solar energy system in Massachusetts is nearly $3,000, most homeowners will be able to take the maximum of $1,000.

How to Claim the Massachusetts Income Tax Credit

Much like the federal government does for its credit, the state of Massachusetts makes it simple to file for the state tax credit. You can follow the steps below to make sure you take advantage of this perk.

• Step 1: Print out the Schedule EC Form for the Solar and Wind Energy Credit from the Massachusetts Department of Revenue’s website.

• Step 2: Fill out the form. You’ll need some information about your system value and any credits taken via this incentive in prior tax years.

• Step 3: File the form or have your accountant file it with your taxes for the year you install your system. You’ll also need to file for two additional years if you can’t take the full credit in the first year.

EcoWatch’s Opinion on the Massachusetts Residential Tax Credit

While the state tax credit provides far less value than the federal credit, it still requires just a few minutes to file for and provides good value — up to $1,000. Plus, it’s available to all solar customers in Massachusetts.

It’s important to keep in mind that you can only take the full credit if you owe the full amount on your income taxes. You’ll need to owe the government at least $1,000 in taxes to take full advantage. However, you can push any unused credit to future years for up to three years.

What You Need to Know About the Solar Massachusetts Renewable Target Program

The SMART Program was established in 2018 in Massachusetts, and it was designed to replace the state’s Solar Renewable Energy Certificate (SREC) program — both the SREC-I and the SREC-II programs.

Much like the SREC programs available in other states, SMART incentivizes solar conversion by promising compensation for all energy you generate with your solar equipment for 10 years after installation. The program becomes less beneficial over time due to its block compensation structure — the more solar customers that take advantage of the program, the lower the compensation rate.

The current compensation rates range between $0.20 and $0.30 per kWh your system generates. With the average 6.5 kW system in Massachusetts expected to produce approximately 6,500 kWh per year, you’re looking at an average incentive of around $1,625 per year.

Over the 10 years this program is active following your installation, that’s $16,250 you could get back just for generating solar electricity. However, this number will likely be lower as the compensation blocks progress.

It’s important to note that this program is not available to all Massachusetts residents. It’s only supported by the three largest utility companies in the state: Unitil, Eversource and National Grid.

How to Claim the SMART Program in Massachusetts

You can opt into the SMART program (also called the Capacity Block Compensation program) simply by installing your solar system. Your installation company will set you up for interconnection, and your production will be monitored and credited automatically. The lack of effort required to take advantage of this perk makes it a great incentive overall.

EcoWatch’s Opinion on the SMART Program in Massachusetts

The SMART program is an outstanding perk and one of our favorites in Massachusetts for several reasons, including:

• It takes no time or effort to enroll in the program
• It eliminates the uncertainty of the SREC market, in which energy credit values can vary
• It helps reduce your solar panel payback period
• It helps bring down the long-term cost of converting to solar energy in Massachusetts

What You Need to Know About the PACE Financing Program in Massachusetts

The PACE program is a popular financing option throughout the U.S. that can help households below a certain income convert to solar.

The program offers low or no down payment requirements, and lets you pay your monthly loan payment via your property taxes for convenience. Ideally, your panels should offset your total monthly utility payments by more than what will be added to your property tax bill.

Keep in mind that this program is only available to income-qualifying individuals and households, so not all residents will be eligible.

How to Claim the Massachusetts PACE Program

Taking advantage of the PACE program in Massachusetts is straightforward, although it can be a bit time-consuming due to the amount of documentation you need to provide. You can follow the steps below to enroll.

• Step 1: Go to the MassDevelopment website to see if you qualify for enrollment. You can begin the process once you submit some basic information about your income and living situation.

• Step 2: A program administrator will reach out to you to discuss the next steps. You might need to submit additional documentation and proof of income, and you’ll be directed to choose a solar installer that is registered with the program.

• Step 3: Your program administrator will direct you through the rest of the process from there.

EcoWatch’s Opinion on the Massachusetts PACE Program

The PACE program can be a great option for low-income individuals who want to support the clean energy movement in Massachusetts but cannot afford to convert to solar on their own. However, there is a lot of paperwork required to enroll, so you’ll have to decide if the program is worth it.

Additionally, we only recommend the PACE program to property owners who expect to live in their homes for many years to come. Adding a payment to your tax bill can make your home less desirable when you go to sell it. It could even drop the perceived value of your home.

If you can afford to adopt solar without this program — even if you lease your panels or take out a loan — we recommend avoiding it altogether.

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What You Need to Know About the Solar Sales Tax Exemption in Massachusetts

With the cost of a typical solar electric system in Massachusetts hovering around $19,110, keeping the all-in cost as low as possible is crucial for the future of solar in the area. In pursuit of keeping costs down, the state waives taxes on the sale of solar equipment, including panels, solar battery storage solutions, inverters, electric vehicle (EV) chargers and more.

The state sales tax rate in Massachusetts is 6.25%, which means the tax on a typical solar system would add $1,194 on average. In waiving this tax, the state is helping to reduce the financial burden of converting to clean energy.

How to Claim the Massachusetts Sales Tax Exemption

The best part about this tax exemption is that it’s automatically applied to your purchase when you convert to solar. Taking advantage of this perk requires no action or effort on your part.

EcoWatch’s Opinion on the Massachusetts Sales Tax Exemption

Since the tax exemption can save you around $1,200 on average and requires no time or effort to apply, we think this is an outstanding benefit to take advantage of when converting to solar in Massachusetts. It lowers your upfront costs, thereby reducing your panel payback period and maximizing your long-term savings.

What You Need to Know About the Massachusetts Exemption for Property Taxes for Solar Equipment

This tax exemption prevents your property taxes from increasing when you convert to solar. Typically, a home improvement project that raises the value of your home will also bump up your assessed value, which, in turn, drives up your taxes.

Solar panels add significant value to your home, so without this perk, your equipment would cause your taxes to go up quite a bit. Experts at Zillow estimate that a solar energy system adds around 4.1% to your home value or an average of over $23,000 in Massachusetts.¹,² Without the exemption, your taxes could go up by a few hundred dollars a year.

How to Claim the Solar Property Tax Exemption in Massachusetts

Much like the sales tax exemption available to Bay Staters, taking advantage of the property tax exemption doesn’t require any work on your part. You simply install your solar equipment, and your tax assessor won’t include your system value when determining your property value.

EcoWatch’s Opinion on the Solar Property Tax Exemption in Massachusetts

The property tax exemption offered in Massachusetts is a great way to minimize the financial burden of installing solar equipment, so we’re big fans of this perk. It’s especially important, in our opinion, because it doesn’t require any effort to take advantage of, and it continues to benefit you for many years after installing your solar panel system.

Net Metering in Massachusetts

Net metering — also called net energy metering or NEM — is a policy that lets you benefit from any excess energy your system generates. Under normal circumstances, you would lose any additional power you produce and send it back to the grid through interconnection. With net energy metering, you earn energy bill credits for that excess power that you can use to reduce future electric bills.

NEM is mandated by the Public Utilities Commission (PUC), so all Massachusetts residents can access this perk. Plus, the PUC requires that all utility companies credit excess energy at the full retail rate, which is the best-case scenario. That means every kWh you generate in excess can pay off a kWh you pull from the electric grid at a later date.

We should note that net energy metering policies are becoming less beneficial in many states, and some states are dropping the policy altogether. This trend has something to do with where a state stands in terms of its RPS goal.

Since Massachusetts has a progressive goal that increases each year, it’s likely the state’s net metering program is here to stay, at least for the foreseeable future.

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How to Enroll in Net Energy Metering in Massachusetts

One of the perks of net energy metering is that all solar customers are opted in automatically, so you don’t have to spend time applying to the program. When your solar installer sets up your equipment, you’ll be connected to the grid for bidirectional energy. The excess electricity you produce will be monitored and credited automatically.

However, we recommend following the steps below to ensure things go smoothly with your net energy metering connection.

• Step 1: Speak with your electricity provider to ensure you have a bidirectional meter installed. If you don’t, request the upgrade for free.

• Step 2: Proceed with installing your home solar energy equipment.

• Step 3: Once your system is commissioned, we recommend monitoring your energy bills for a month or two to ensure that the credits are appearing.

EcoWatch’s Opinion on Net Metering in Massachusetts

Net energy metering is an outstanding solar perk in Massachusetts. In our opinion, it’s one of the most beneficial. This is especially true since most customers won’t have to do anything to take advantage of the benefit.

While it’s hard to calculate exactly how much NEM is likely to save you over your system’s lifespan, it can help push you toward eliminating your electric bills. That means you’ll edge closer to the typical lifetime savings of over $33,000, which you’re likely to see after your panels pay for themselves!

Plus, since energy costs and energy bills are some of the highest in the country in New England and Massachusetts, specifically, net energy metering is a crucial perk to take advantage of.³

Local Solar Incentives in Massachusetts

In addition to the federal and state incentives we’ve discussed above, several electric companies and municipalities in the Bay State offer rebate programs and other perks to incentivize solar adoption. We’ll briefly discuss the available incentives below.

• Hudson Light & Power Photovoltaic Incentive Program: Solar rebate up to $1.20 per watt installed, with a maximum of 50% of your system total or $7,500, whichever is lower.⁴

• Concord Municipal Light Plant Solar Rebate: Offers up to $625 in rebates per kW installed, up to a maximum of $3,125.⁵

• Taunton Municipal Light Plant Residential PV Rebate Program: Offers a rebate of up to $0.60 per watt installed up to a maximum of $4,500.⁶

• Reading Municipal Light Department Residential Renewable Energy Rebates: Offers rebates of up to $1 per watt with a maximum rebate of $2,000.⁷

• Holyoke Gas & Electric Residential Energy Conservation Loan Program: Offers 0% APR solar loans for up to $10,000 for 10 years.⁸

• Chicopee Electric Light Residential Solar Rebate Program: Provides rebates of up to $1.20 per watt installed for up to 50% of your system total or $12,000, whichever is less.⁹

Which Tax Incentives Are Best in Massachusetts?

Above, we’ve mentioned every solar incentive available in Massachusetts, but not all of these perks are equally as beneficial as the others. This is especially true since some require minimal work on your part, while others involve some time and effort to apply. Below, we’ll discuss what we believe are the best incentives to take advantage of in Massachusetts.

The Federal Solar Tax Credit

The federal credit is the one perk we recommend you don’t miss out on. This incentive provides an average potential value of over $5,700 in Massachusetts and requires just a few minutes of your time to apply.

Just remember that this credit can only be taken if you owe money on your income taxes. You can roll over the credit for up to five years, but after that, any unused credit will be lost.

SMART Program

The SMART program in Massachusetts, which is the state’s equivalent of an SREC program, is an all-but-essential perk to take advantage of. It’s available for residential, commercial and community solar projects.

This incentive is active for 10 years after you install your system. Over that time, the average system in Massachusetts can generate over $16,000 in cash-back incentives from this program. Not only can it effectively save you thousands of dollars, pay off your system more quickly and maximize your long-term savings, but it also requires no work on your part to enroll.

Net Metering

In our opinion, net energy metering is another perk that is essential for making solar equipment a good investment in Massachusetts. You won’t spend any time or effort enrolling in this program and it can benefit you in a variety of ways, including:

• Reducing your panel payback period
• Maximizing your return on investment
• Providing higher long-term energy savings
• Increasing the overall value of your PV system

Massachusetts State Tax Credit

The tax credit offered by the state of Massachusetts is another great perk to take advantage of to help lower your overall solar system cost. Similar to the federal credit, filing for this credit should only take a few minutes, but it provides a value of up to $1,000.

Keep in mind that you cannot take this credit if you don’t owe money on your tax bill, and it can only be rolled over for three years.

What Do Massachusetts Residents Need to Know About SRECs?

Massachusetts used to have a standard SREC program, which provided cash incentives for all solar production, regardless of whether you used that energy in your home or exported it to the grid. In 2018, the Massachusetts Department of Energy Resources (DOER) changed to the SMART program, which is more beneficial than a standard SREC offering.

The SMART program still credits you for solar generation, but the credit rate is fixed based on a block program rather than the local SREC market. The current compensation rate is between $0.20 and $0.30 per kWh produced, which comes out to up to $1,800 for one year of energy production with a typical 6.5 kW system.

The program is in effect for 10 years after you install your system, which means you could generate over $18,000 in credits over the life of the program. Your actual payout will most likely be lower since the credit rate drops as the state moves through the block program. Still, this is an outstanding incentive available in Massachusetts.

Are SRECs Taxable in Massachusetts?

Yes, SRECs and Massachusetts’ equivalent of SRECs are considered taxable income. You will need to report them when you file your taxes each April.

What’s the Near-Term Outlook For More Incentives in Massachusetts?

Massachusetts currently has some outstanding incentives, and the offerings are better than what you’d find in most other states. The potential for additional perks is always there, but it’s likely there won’t be new benefits popping up any time soon.

The state has an RPS goal of producing 40% of its energy via renewable sources by 2030, and the percentage increases by 1% each year thereafter until the entire state is effectively emission-free. The state is currently on track to hit its 2030 goal, so it’s unlikely that new perks will become available in the next few years.

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Read More About Going Solar in Massachusetts

• The Best Solar Companies in Massachusetts
• Massachusetts Solar Panel Cost Guide
• Are Solar Panels Worth It In Massachusetts?