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

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

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

Solar incentives help mitigate the cost of installing a solar panel system on your home. Financial incentives like these are designed to encourage more homeowners to make the switch to renewable energy. You might qualify for several kinds of incentives, including cash back, discounts or credit towards your monthly utility bill, depending on your situation. Certain incentives come from your specific utility company, county or municipality, some from the state of New Jersey and others from the federal government. Categories of solar incentives include:

• Tax Exemptions: Sales tax exemptions are effective at the point of sale for your solar system. Property tax exemptions allow you to ignore the value added by your solar system when you calculate how much property tax you need to pay on your house.
• Net Metering: Net metering becomes relevant after your solar system is up and running. If you've signed a net metering agreement with your Scotch Plains utility company, the company will subtract the value of the excess energy produced by your solar system from your utility bill each month. In some places, this is a dollar-for-dollar credit, while in other areas you may receive a refund equivalent to a percentage of the value.
• Tax Credits: Tax credits are dollar-for-dollar reductions in the amount of income tax that 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 might be available to you if the solar system on your home produces over a specified (typically small) amount of electricity. Performance-based incentives are generally handled at the state level. You can sell SRECs to your utility company or other buyers, and the money you make is generally considered part of your taxable income.
• Rebates: A solar rebate is a partial refund given after you've purchased your solar panels. Rebates may be offered by your local utility company, your county or your state. The rebates are usually applied before calculating tax credits.

Federal Solar Incentives

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

The ITC can be applied to solar panels installed after January 1, 2006 on a primary or secondary residence that you own in the United States. The credit initially covered 30% of the total cost — for panels, accessories, equipment and labor — although that amount may range from 26-30%, depending on when your solar project was undertaken. There is no cap on the amount you can claim.

To best understand how the ITC could apply to you, contact your local Scotch Plains solar panel installer and request more information.

In August 2022, the ITC (now called the Clean Energy Credit) was bolstered by the passing of the Inflation Reduction Act. For solar system installations that begin after January 1, 2022 and are completed by the end of 2032, homeowners can apply for a credit equal to 30% of the total cost. The percentage will then decrease annually until the Clean Energy Credit ends in 2035. Beginning in 2023, it will also be easier to obtain credits for energy storage systems under the new laws.

More information about the new Inflation Reduction Act can be found here. Your local Scotch Plains solar panel installer can answer your questions and explain how the new Clean Energy Credit may apply to you.

State & Local Solar Incentives

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

Next Steps for Installing Solar in Scotch Plains

The expanding number of solar incentives available has enormously increased the use of solar power nationwide over the last 15 years. You can get solar incentives from the New Jersey government, the federal government or your local utility company. Talking to your local Scotch Plains solar panel installation expert is an excellent first step towards getting all the incentives you qualify for when you switch to solar energy.