2022 Massachusetts Solar Incentives, Tax Credits, Rebates (And More)
In this EcoWatch guide on the Massachusetts solar incentives, you’ll learn:
- How to get the 26% solar tax credit
- What the SMART program provides
- If you qualify for the Massachusetts state solar rebates
- When these incentives will no longer be offered
This guide has helped thousands of Massachusetts homeowners join the solar movement by providing them with the latest solar incentives programs for the Codfish state, saving them both time and money. Let’s get started!
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Broadly speaking, state governments have led the way in implementing renewable, emission-free energy policies in the U.S., and a couple of states have always been at the forefront of these efforts. Despite not having the vast land of California or the year-round sun of Arizona, the availability of a Massachusetts solar tax credit and other rebate programs has long been a reason that this New England state is a top state for solar energy installations.
According to the Solar Energy Industries Association, Massachusetts is currently eighth in the country for solar energy installations, which is especially impressive given how small the state is geographically compared with many of the states it’s outranking. For residents, the availability of Massachusetts solar rebates and incentives has made solar energy an appealing and logical option, and in offering such opportunities, the Massachusetts government has set a great example for the rest of the country.
What is the Massachusetts Solar Tax Credit?
The most appealing Massachusetts solar tax credit available is the Personal Income Tax Credit, otherwise known as the Residential Renewable Energy Income Tax Credit. Massachusetts residents who purchase home solar energy systems are eligible for a tax credit on their income tax filing that totals 15% of the cost of the solar system (up to a maximum tax credit of $1,000).
Massachusetts implemented this tax credit back in 2016, and the direct impact is bringing down the cost of solar panels for homeowners. This serves as a hefty incentive to adopt solar power or another renewable energy system. The impact has been steady and notable, which is no doubt a reason that solar installers have seen such demand across the state of Massachusetts. WATCH: Why Should You Go Solar in Massachusetts
What Other Programs and Rebates Does Massachusetts Offer?
While the Massachusetts solar tax credit has been the most heralded and impactful of the solar incentives available in the state, residents of Massachusetts have several additional opportunities to take advantage. The following incentive programs and policies make the decision to go solar even more financially savvy.
|Massachusetts Solar Rebates and Incentives||Description|
|Solar Massachusetts Renewable Target (SMART) Program||Customers who install approved solar panel systems can get direct compensation for every kilowatt hour generated by their system.|
|Massachusetts Solar Tax Exemptions||Massachusetts does not collect sales tax on solar panel systems and omits the value of solar panel systems from property value assessments for tax purposes.|
|Massachusetts Net Metering Program||Homes and businesses are paid per kilowatt-hour for all excess electricity they generate and send back to the central power grid.|
Solar Massachusetts Renewable Target (SMART) Program
The goal of the Solar Massachusetts Renewable Target (SMART) program is to offer direct incentives for both residential and commercial solar energy systems that are tied to one of three investor-owned electric utility grids in the state: Eversource, National Grid and Unitil.
The Massachusetts Department of Energy Resources (DOER) instituted this program in late 2018 and it directly pays the owners of solar systems for all power generated by their systems for 10 years. Then, in late 2021, the Department of Public Utilities approved an expansion to provide additional payments. You may hear these payments referred to as either “Solar Renewable Energy Credits” or “Solar Renewable Energy Certificates” (SRECs).
The specifics of how much a customer gets paid varies based on their utility provider and the size of their system, but the payouts range from $0.22 per kilowatt-hour produced all the way up to $0.34 per kWh. Further, the SMART program has added provisions for higher payouts if a battery storage system is added. While many solar panel systems can already pay for themselves via reduced electric bills in less than a decade, the additional incentives offered by the SMART program can nearly cut the solar payback period in half.
Massachusetts Solar Tax Exemptions
Direct tax exemptions are another way that the state of Massachusetts seeks to ensure that the cost of solar panels is not preventing residents from investing. Most products in the state will have a standard sales tax of 6.25% applied at the point of sale, but Massachusetts would rather the state sales tax not be collected if it would deter any additional homes from investing in solar. As a result, solar energy systems are exempt from sales tax.
Another solar tax exemption offered to owners of systems in Massachusetts is the property tax exemption. For any typical home upgrade — such as an extension to a house, a new pool, or otherwise — the property will get inspected, and the value of the home is reassessed so taxes can be paid on the full value of the home. While solar power systems increase the value of a home and how much it can sell for, the state of Massachusetts opts to not include the value of the solar system when assessing the total amount at which the property should be taxed.
Massachusetts Net Metering Program
Lastly, Massachusetts is ahead of the curve when it comes to net metering as a benefit allowed for owners of solar systems. Through net metering, properties that are generating electricity, whether through solar panels or otherwise, can be compensated for sending excess power that they don’t need in a given moment back into the grid.
For example, the peak time to generate solar power is mid-afternoon, but if a home is empty during those hours because its residents are at school or work, it’s likely that all of that energy your system produces will not be used. In such an instance, the home can send power to the local grid to be used by other people in the service area, and thanks to net metering policies in Massachusetts, the owners of those solar systems are compensated at the same price they pay when consuming power from the grid.
When done optimally, such net metering policies can nearly wipe out an entire electric bill for efficient homes operating with solar.
What do Bay Staters need to know about the Federal Solar Tax Credit?
While Massachusetts is going out of its way to offer tax incentives and rebates to potential solar customers, these projects are eligible for the relevant federal solar tax credit as well. In fact, the federal solar investment tax credit (ITC) is the most commonly utilized tax credit for new solar projects and has been for a number of years. This tax credit is only available for those who buy their solar PV system outright (this can be in the form of either a solar loan or a cash purchase).
For eligible customers and solar systems, the ITC allows 26% of the cost of solar systems to be claimed as a credit against federal tax returns, provided those systems are operational before December 31, 2022. For systems placed into service in 2023, the tax credit is 22% of the total system cost. As the code is currently written, there is no ITC for solar systems installed after 2023, though clean energy advocates and pro-solar politicians are seeking to extend the federal solar tax credit in the future.
- Are Solar Panels Worth It in Massachusetts?
- 2022 New York Solar Incentives, Tax Credits, Rebates (And More)
- Best Solar Companies in Massachusetts (2022 Reviews)
- Database of State Incentives for Renewables & Efficiency | DSIRE
- Massachusetts Energy Rebates and Incentives | Mass.gov
- Top 3 Financing Options for Solar Panels | EcoWatch
- Rhode Island Solar Incentives | EcoWatch
FAQ: Massachusetts Solar Incentives
Massachusetts has a solar tax credit called the Residential Renewable Energy Income Tax Credit. Homeowners can claim this credit on their state tax filing, and it’s worth 15% of the cost of the solar system (up to a maximum tax credit of $1,000). All Massachusetts installations are also eligible for the federal investment tax credit (ITC).
Yes, Massachusetts offers numerous financial incentives that help the already profitable endeavor of installing solar energy to be even better for the budget in the long run. With properly planned and installed solar systems, many in Massachusetts can expect their payback period to be just a couple of years, though you should consult with an expert about your exact situation for any unique aspects of your potential solar system.
Solar energy systems will always come with some level of upfront costs, though many opportunities exist for financing (including on-bill financing) that bring the initial capital required down to a manageable and accessible level for residents across Massachusetts. Once systems are installed, the reduced energy bills, the availability of net metering, and potential participation in the Solar Massachusetts Renewable Target (SMART) program will all pay back the initial investment and the bulk of the solar system’s life will represent profit.
The specific costs will vary based on the size of the system and how well suited the potential location is to solar installations. That said, our research shows that the average cost paid in Massachusetts is $2.94 per watt for solar system installations, slightly higher than the nationwide average of $2.66 per watt.