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

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

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

Solar incentives mitigate the cost of installing a solar panel system on your home. Financial incentives like these are in place to encourage more Americans to make the switch to renewable energy. You may be eligible for several types of incentives, including discounts, cash back or monthly utility bill credits, 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. Some broad categories of solar incentives include:

• Rebates: Some solar companies will help you claim a rebate, or partial refund after purchase, for your solar panels. States or counties will also sometimes offer limited-time rebates. The value of a rebate will usually be deducted from your total price before tax credits are calculated.
• Tax Credits: Different from tax deductions, tax credits are dollar-for-dollar reductions in the amount of income tax that you owe the government.
• Solar Renewable Energy Certificate (SREC): SRECs and similar other performance-based incentives may be available to you if your solar system produces over a specified (usually small) amount of electricity. Performance-based incentives are usually handled by the state government. You can sell SRECs to your utility company or other buyers, and the money you make is normally considered part of your taxable income.
• Tax Exemptions: Tax exemptions may come in two forms. First, there is sales tax exemption, which is applied at the time you purchase your solar panels. The second is property tax exemption, which allows you to exclude the value added by your solar system when paying property tax on your home.
• Net Metering: Net metering becomes relevant once your solar system is up and running. If you have a net metering agreement with your Summit utility company, it will subtract the value of the excess energy produced by your solar system from your utility bill each month. In some locations, this credit is dollar-for-dollar, while in other areas you may get refunded 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. The Federal Solar Investment Tax Credit, or ITC, is likely the most commonly known federal solar incentive. The ITC offers a tax credit for a set percentage of your solar system's cost.

The ITC is applied to the total cost of solar panel installation, including the panels themselves as well as labor, equipment and accessories. 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 claim amount.

Your local Summit solar panel installation expert can provide more information about the ITC and how it may apply to your situation.

The ITC was renewed and increased in scope after the passage of the Inflation Reduction Act in August 2022. It's also now called the Clean Energy Credit. The new Clean Energy Credit extends until 2035. You are now eligible for a 30% credit for solar systems that began installation after January 1, 2022 and are completed by the end of 2032. The credit will then decrease annually until the date of expiration. Starting in 2023, it will also be easier to obtain credits for energy storage systems under this new program.

Click here to learn more about the new Inflation Reduction Act. To fully understand how the new Clean Energy Credit applies to you, get in touch with your local Summit solar installers.

State & Local Solar Incentives

Some solar incentives are often also provided by state and local governments. Similar to federal incentives, these may include tax credits, rebates and more. Some 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 Summit

There are a number of different solar incentives: those given by local utility companies, those given by the New Jersey government and those given by the federal government, to name a few. The use of solar energy has grown enormously in the last 15 years, thanks to these incentives. Your local Summit solar panel installation company can give you more information about which incentives you can apply for, and get you started on the path to switching to renewable energy today.