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

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

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

The phrase "solar incentives" generally refers to financial incentives implemented by the government and by solar companies to encourage the adoption and use renewable energy by making the installation and use of solar panels more affordable. Incentives could include things like discounts, cash back or monthly utility bill credits. Some incentives are offered federally, while others are provided by the state of New Jersey or by your utility company, county or municipality. Types of solar incentives might include:

• Solar Renewable Energy Certificate (SREC): SRECs and other similar performance-based incentives are typically handled by your state government. Once your solar system meets a certain threshold (generally a small amount of energy production), you are eligible to receive SRECs that can be sold to your utility company or other buyers. The money you receive is usually considered part of your taxable income.
• Rebates: Solar rebates may be provided by your local utility company, or by your state or county. These rebates work as partial refunds that are applied after you pay for solar panels and before tax credits are calculated.
• Net Metering: Be sure to speak to your Trenton utility company about signing a net metering contract. This allows you to receive credit towards your monthly utility bill for the value of excess energy generated by your solar panels. You might receive either a dollar-for-dollar credit or a percentage of the value.
• Tax Credits: Tax credits are dollar-for-dollar reductions that lower the amount of income tax you owe the government. (A tax credit is different from a tax deduction.)
• Tax Exemptions: Your solar system may qualify for exemptions on both sales and property tax. Sales tax exemptions are applied at the time of purchase. Property tax exemptions allow you to ignore the added value of the solar panels when calculating property taxes on your house.

Federal Solar Incentives

Federal solar incentives are likely the first thing that you think of when you think about solar incentives. The Federal Solar Investment Tax Credit, or ITC, is the most well-known federal solar incentive. The ITC provides a tax credit for a predetermined percentage of your solar system's cost.

The ITC applies towards solar systems installed after January 1, 2006 and under this program you can deduct from your taxes a percentage of the total cost of solar panels, equipment, accessories and labor. This credit can be claimed on a solar panel system 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.

Your local Trenton solar panel installer can provide more information about the ITC and how it might apply to your situation.

In August 2022, the ITC (now referred to as the Clean Energy Credit) was expanded and extended by the passage of the Inflation Reduction Act. For solar systems installed between January 1, 2022 and December 31, 2032, homeowners can receive a credit for 30% of the total cost. The percentage will then decrease annually until the Clean Energy Credit expires in 2035. Starting in 2023, it will also be easier to get credits for energy storage systems under this new program.

More information about the new Inflation Reduction Act can be found here. The best way to understand how the new Clean Energy Credit will apply to you is to reach out to your local Trenton solar panel installers with your questions.

State & Local Solar Incentives

Some solar incentives are often also provided at the state and local level. Similar to federal incentives, these could include tax credits, rebates and more. Incentives may be offered by your county or municipality, or by the state of New Jersey. Some incentives are available for only a limited time, while others are ongoing.

Next Steps for Installing Solar in Trenton

There are many kinds of solar incentives: those given by local utility companies, those given by the federal government and those given by the New Jersey government, to name a few. The use of solar energy has grown tremendously in the last 15 years, partially due to these incentives. Reaching out to your local Trenton solar panel installer is the right first step towards getting the most money possible when you switch to solar energy.