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

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

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

Solar incentives are designed to make renewable energy usage more affordable through financial incentives to help people install solar panels on their homes. Different kinds of incentives, such as discounts, cash back or monthly utility bill credits, might be available to you. Some incentives may be handled by the state of New Jersey, by your utility company or by county or municipality, while other incentives are federal. Types of solar incentives might include:

• Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much income tax you owe the federal government.
• Solar Renewable Energy Certificate (SREC): SRECs and similar performance-based incentives are normally handled at the state level. Once your solar system meets the qualification threshold (usually a small amount of energy production), you can receive SRECs that you can then sell to your utility company or other buyers. The money you receive from the sale is generally considered part of your taxable income.
• Tax Exemptions: Your solar panels may qualify for both sales tax and property tax exemptions. Sales tax exemptions come into effect at the time of purchase. Property tax exemptions let you exclude the value that solar panels add when calculating property taxes on your house.
• Rebates: Solar companies may help you claim a rebate, or partial refund after purchase, for your solar panels. States or counties will also sometimes offer limited-time rebates. If you receive a rebate, that amount will usually be deducted from your total price before tax credits are calculated.
• Net Metering: Net metering becomes relevant once your solar system is up and running. If you've signed a net metering agreement with your Passaic utility company, the company will subtract the value of the excess energy your solar system produces from your utility bill each month. In some places, this credit is dollar-for-dollar, while in other places you may get refunded a percentage of the value.

Federal Solar Incentives

When someone says "solar incentives," you probably think of federal incentives first. The solar incentive that you're most familiar with is probably the Federal Solar Investment Tax Credit (ITC), which gives you a credit on your taxes equal to a predetermined percentage of your solar system's cost.

The ITC can be credited towards the value of a solar system installed on your primary or secondary residence in the United States. The solar panels must have been installed on a property you own after January 1, 2006 for you to claim the credit. The ITC initially covered 30% of all costs (panels, accessories, equipment and labor), although the covered amount has fluctuated over the years between 26-30%. The amount you qualify for will depend on when your solar system was installed. There is no cap on the amount you can claim.

To best understand how the ITC will apply to you, speak to your local Passaic solar panel installer and request more information.

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. Now, solar installation projects begun after January 1, 2022 and finished by December 31, 2032 can qualify 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. Beginning in 2023, it will also be easier to qualify for credits for energy storage systems under the new laws.

More information about the new Inflation Reduction Act can be found here. The best way to learn more about how the new Clean Energy Credit might apply to you is to reach out to your local Passaic solar panel company with your questions.

State & Local Solar Incentives

There are more than just federal solar incentives; tax credits, rebates and more are often offered at the state and local level. Some incentives are ongoing, while others might only be available for a limited time. Solar incentives might be offered by the New Jersey government, or by your county or municipality.

Next Steps for Installing Solar in Passaic

Solar energy use nationwide has significantly increased in the last 15 years, in part due to the increase in availability of solar incentives. You might receive these incentives from the New Jersey government, the federal government or your local utility company. Speaking with your local Passaic solar panel installation company is a great first step towards getting the most money possible when you switch to solar energy.