2023 Solar Incentives Guide for Hillsborough, NJ - Tax Credits & Rebates

What Solar Tax Credits, Incentives, and Rebates are Available in Hillsborough?

Source: https://www.dsireusa.org/

Solar incentives are designed to encourage people to switch their home over to renewable energy by offering incentives that lower the financial burden of solar panel installation and use. These incentives can include upfront discounts, cash back or credit towards your monthly utility bill. Some incentives are given by the federal government, some by the state of New Jersey and some by your specific utility company, county or municipality. You might qualify for any of the following types of solar incentives:

• Rebates: A solar rebate is a partial refund credited to your account after you've paid for your solar system. These might be offered by your local utility company, your state or your county. The rebates are usually applied before calculating tax credits.
• Solar Renewable Energy Certificate (SREC): SRECs and similar performance-based incentives might be available to you if your solar system produces more than a specified (usually small) amount of electricity. This category of incentives is generally handled at the state level. You can sell SRECs to your utility company or other buyers, and the money you receive in return is typically considered part of your taxable income.
• Net Metering: Net metering becomes relevant once your solar system is up and running. If you've signed a net metering agreement with your Hillsborough utility company, they will subtract the value of the excess energy your solar system produces from your utility bill each month. In some locations, this is a dollar-for-dollar credit, while in other places you might make back a percentage of the value.
• Tax Exemptions: Tax exemptions can come in one of two forms. The first is sales tax exemption, applied at the time you purchase your solar panels. The second is property tax exemption. This allows you to ignore the added value of your solar system when calculating property tax for your home.
• Tax Credits: Tax credits lower, dollar-for-dollar, how much income tax you owe the federal government. These are different from tax deductions.

Federal Solar Incentives

Federal solar incentives are probably the first thing that you think of when you think about solar incentives. An incentive that most people are likely to be familiar with is the Federal Solar Investment Tax Credit (ITC). This incentive is a tax credit for a predetermined percentage of your solar system's cost.

The ITC covers solar systems installed after January 1, 2006 and lets you deduct from your taxes a percentage of the total cost of solar panels, labor, accessories and equipment. You can claim this credit for a solar panel system installed on a primary or secondary residence in the United States that you own. The original amount you could claim was 30% of the total cost, although the amount you can claim may range between 26-30%. There is no maximum amount you can claim.

Your local Hillsborough solar panel installer can provide you with more information about the ITC and how it may apply to your situation.

The Inflation Reduction Act, passed in August 2022, expanded and extended the ITC (as well as renaming it to the Clean Energy Credit). Now, solar installation projects started after January 1, 2022 and completed by the end of 2032 may be eligible for a 30% tax credit. This credit amount will then decrease slightly each year until the end of the current Clean Energy Credit in 2035. Starting in 2023, the expansion will also make it easier to get credit for energy storage systems.

Click here to learn more about the new Inflation Reduction Act. The best way to understand how the new Clean Energy Credit might apply to you is to get in touch with your local Hillsborough solar panel installers.

State & Local Solar Incentives

In addition to those provided at the federal level, there are often also state solar incentives. Tax credits, rebates and more might be available at a more local level. Some incentives are offered for only a limited time, while others are ongoing. Your local solar incentives might come from the New Jersey government, or from your specific county or municipality.

Next Steps for Installing Solar in Hillsborough

Solar energy use nationwide has significantly increased in the last 15 years, in part thanks to the proliferation of solar incentives. You may get these incentives from your local utility company, the federal government or the New Jersey government. We suggest talking to your local Hillsborough solar installation expert to learn more about these incentives and to be sure that you're getting the largest number possible for your solar panels.