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

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

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

Solar incentives are designed to make renewable energy usage more affordable via financial incentives to help people install solar panels on their homes. Incentives may include things like discounts, cash back or monthly utility bill credits. Some incentives are provided by the federal government, while others are handled by the state of New Jersey or your utility company, county or municipality. Some broad categories of solar incentives include:

• 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 and similar performance-based incentives are usually handled at the state level. Once your solar panel system meets a predetermined threshold (typically a small amount of energy production), you are eligible to receive SRECs that can then be sold to your utility company or other buyers. The money you make from the sale is usually considered part of your taxable income.
• Rebates: Rebates, or cash back after a purchase, are usually given before any solar tax credits are calculated. Rebates might be given by your local utility company, by your state or by your county.
• Tax Exemptions: Tax exemptions may come in two forms. The first is sales tax exemption, applied when you purchase 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 house.
• Net Metering: Net metering becomes relevant after your solar system is up and running. If you have in place a net metering agreement with your Paramus utility company, the company 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 receive a refund equivalent to a percentage of the value.

Federal Solar Incentives

Federal incentives are the kind of incentives that you are most likely to have some knowledge of. One of the incentives that most people are likely to be familiar with is the Federal Solar Investment Tax Credit (ITC). This is a tax credit for a predetermined percentage of the cost of your solar system.

The ITC can be applied to solar systems installed after January 1, 2006 and allows you to deduct from your taxes a percentage of the total cost of solar panels, equipment, labor and accessories. This credit can apply towards solar panels installed on a primary or secondary residence in the United States that you own. The original claim amount 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.

To better understand how the ITC could apply to you, reach out to your local Paramus solar panel installation expert and ask for more information.

In August 2022, the Inflation Reduction Act made revisions to the ITC, now called the Clean Energy Credit. The Clean Energy Credit runs until 2035. Any solar installation project that is completed between January 1, 2022 and December 31, 2032 may qualify for a 30% tax credit; this amount will then decrease slightly each year until the end of the current program. Starting in 2023, it will also be easier to qualify for credits for energy storage systems under this new program.

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

State & Local Solar Incentives

Some solar incentives may be provided at the state and local level. Similar to federal incentives, these might include tax credits, rebates and more. The incentives — which may be handled by the state of New Jersey, or by your county or municipality — might be offered for only a limited time, or on an ongoing basis.

Next Steps for Installing Solar in Paramus

Solar energy use nationwide has increased enormously in the past 15 years, in part thanks to the proliferation of solar incentives. You might receive these incentives from the federal government, the New Jersey government or your local utility company. Getting in touch with your local Paramus solar panel installer is an excellent first step towards getting all the incentives you qualify for when you switch to solar energy.