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

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

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

The term "solar incentives" refers broadly to financial incentives put in place by solar companies and the government to encourage increased use of renewable energy by making solar panels more affordable. The incentives could include upfront discounts, cash back or credit towards your monthly utility bill. Some incentives are handled by the federal government, some by the state of New Jersey and some by your specific utility company, county or municipality. Some solar incentives you might qualify for are:

• Net Metering: You can sign a net metering contract with your Madison utility company that will apply to all or a percentage of the excess electricity your solar panels generate. They will then subtract this value from your utility bill each month.
• Tax Exemptions: Tax exemptions can come in one of two forms. First, there is sales tax exemption, applied at the time you purchase your solar panels. The second is property tax exemption, which allows you to ignore the value added by your solar system when calculating property tax for your house.
• Rebates: Some solar companies will help you claim a rebate, or partial refund of your purchase, for your solar system. Counties or states will also offer limited-time rebates at various times. If you receive a rebate, that amount will usually be deducted from your total price before tax credits are calculated.
• Tax Credits: Tax credits are dollar-for-dollar reductions that lower the amount of income tax you owe the federal government. (A tax credit is different from a tax deduction.)
• Solar Renewable Energy Certificate (SREC): SRECs can be sold to your utility company (or other buyers) for cash that typically becomes part of your taxable income. Generally, a certain (small) threshold of energy production must be met before your solar system can earn SRECs or other performance-based incentives. SRECs and similar incentives are generally handled at the state level.

Federal Solar Incentives

Federal solar incentives are likely the first thing that comes to mind when you think about solar incentives. The solar incentive that you may be most familiar with is the Federal Solar Investment Tax Credit (ITC), which gives you a credit on your taxes equal to a certain percentage of your solar system's cost.

The ITC can be applied to the total cost of installing solar panels, including the panels themselves as well as accessories, labor and equipment. This credit can be claimed for panels installed after January 1, 2006 on a primary or secondary residence that you own and that is located in the United States. Originally set at 30% of total costs, the credit has fluctuated over time, and you may qualify for different amounts depending on when your project was completed. There is no maximum amount you can claim.

To find out exactly how much money the ITC could save you, contact your local Madison solar panel installation expert.

The ITC was both renewed and expanded by the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. With the new provisions, solar installation projects started after January 1, 2022 and completed by the end of 2032 can qualify for a 30% tax credit. This percentage will then decrease slightly each year until the current Clean Energy Credit expires in 2035. Starting in 2023, the expansion to the program will also make claiming credit for energy storage systems easier than ever before.

Click here to learn more about the new Inflation Reduction Act. Your local Madison solar panel installer can answer any questions you have and explain how the new Clean Energy Credit may apply to you.

State & Local Solar Incentives

Some solar incentives are often also provided at the state and local level. Like with federal incentives, these could include rebates, tax credits and more. Certain incentives are ongoing, while others are available for a limited time. These incentives might be offered by your county or municipality, or by the New Jersey government.

Next Steps for Installing Solar in Madison

Solar energy use nationwide has increased enormously in the last 15 years, in part thanks to the increase in availability of solar incentives. You may get these incentives from the New Jersey government, the federal government or your local utility company. It is a good idea to talk to your local Madison solar installation expert to learn more about these incentives and to ensure that you're getting the most money possible for your solar panels.