2025 Solar Incentives Guide for Somerset, NJ - Tax Credits & Rebates

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

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

Solar incentives are designed to make renewable energy usage more affordable through financial incentives for those who install solar panels on their homes. Incentives can include things like discounts, cash back or monthly utility bill credits. Some incentives are offered federally, while others are handled by the New Jersey government or by your utility company, county or municipality. Some solar incentives you might qualify for are:

• Solar Renewable Energy Certificate (SREC): Generally, solar systems that produce over a specific (usually small) amount of electricity qualify for SRECs or other similar performance-based incentives. SRECs and the like are typically given by your state government. When you receive an SREC, you can sell it to your utility company or another buyer, and generally the money you make is normally considered part of your taxable income.
• Tax Credits: Tax credits are dollar-for-dollar reductions (not deductions) in how much income tax you owe the government.
• Tax Exemptions: These can come in the form of property tax exemptions, which allow you to ignore the value of your solar system when calculating the taxes you pay on your home. You may also qualify for an exemption on sales tax at the time of purchase.
• Rebates: Solar companies may help you claim a rebate, or partial refund of your purchase, for your solar system. States or counties will also sometimes offer limited-time rebates. If you receive a rebate, that amount will usually come off your total price before any tax credits are calculated.
• Net Metering: Net metering becomes relevant once your solar panels are up and running. If you have in place a net metering agreement with your Somerset utility company, it will subtract the value of the excess energy produced by your solar system from your monthly utility bill. In some locations, this is a dollar-for-dollar credit, while in other areas you might get refunded a percentage of the value.

Federal Solar Incentives

When someone says "solar incentives," you probably think of federal incentives first. It's likely that you've heard of the Federal Solar Investment Tax Credit, or ITC. This incentive is a tax credit equal to a predetermined percentage of the money you spend installing solar panels.

The ITC initially applied to 30% of the total cost of installing a solar system, although it has fluctuated slightly over the last few years between 26-30%. The installation date of your solar system will determine what percentage you qualify for. The total installation cost includes the panels themselves as well as the cost of accessories, labor and equipment. There is no maximum amount you can claim. The ITC applies to solar panels installed after January 1, 2006, on your primary or secondary residence. The residence must be in the United States and owned by you.

To best understand how the ITC might apply to your situation, contact your local Somerset 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. The new Clean Energy Credit is valid until 2035. Homeowners are now eligible for a 30% credit for solar systems installed between 2022 and 2032. The total credit will then be decreased by a few percentage points every year until it expires. Starting in 2023, the expansion will also make it easier to get credit for energy storage systems.

More information about the new Inflation Reduction Act can be found here. To best understand how the new Clean Energy Credit applies to you, get in touch with your local Somerset solar installers.

State & Local Solar Incentives

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

Next Steps for Installing Solar in Somerset

You can apply for and receive solar incentives from the federal government and the New Jersey government, as well as from your local utility company. This increase in availability of solar initiatives in the past 15 years has helped increase solar adoption nationwide. We recommend talking to your local Somerset solar installation expert for more information about these incentives and to ensure that you're getting all the money you can for your solar panels.