Solar Guide

The Massachusetts Residential Renewable Energy Tax Credit is a state tax incentive that helps homeowners save money when they install solar panels, wind turbines, or other qualifying renewable energy systems at their primary residence. This credit reduces your Massachusetts state income tax bill dollar-for-dollar, making clean energy more affordable for Bay State residents.

You can claim a credit equal to 15% of your total system costs (including equipment and installation), up to a maximum of $1,000 per residence. The credit is calculated on your “net expenditure,” which means your total costs minus any federal tax credits and government rebates you receive. If your credit amount exceeds what you owe in state taxes for the year, you can carry the remaining credit forward for up to three additional years.

To qualify, you must be a Massachusetts resident who owns or rents your primary residence and is not claimed as a dependent on someone else’s tax return. The renewable energy system must be new (not previously used), expected to operate for at least five years, and used primarily for residential purposes like heating, cooling, hot water, or electricity generation. Joint property owners can share the credit based on their ownership percentage, but the $1,000 maximum still applies per residence.

Keep in mind that certain items don’t qualify for this credit, including structural components like windows, roofs, and walls, even if they help with energy efficiency. Regular maintenance, repairs, and leased equipment also don’t count toward the credit. The credit applies to the tax year when your system installation is completed and paid for.

Massachusetts offers a property tax exemption for homeowners who install solar energy systems on their property. This state-level incentive removes the added property value of your solar installation from your annual property tax assessment, meaning you won’t pay higher property taxes even though your solar system increases your home’s value. The exemption applies to both owned and leased solar systems, as well as solar systems paired with battery storage.

To qualify for this exemption, your solar system must meet one of three criteria: it produces no more than 125% of your property’s annual electricity needs, it’s 25 kilowatts or smaller in capacity (verified by state documentation), or you’ve entered into a payment-in-lieu-of-taxes agreement with your municipality. The exemption lasts for 20 years from installation, though you may be able to negotiate a longer period with your local municipality. The exemption is determined annually on July 1st, and you cannot combine this exemption with most other property tax exemptions on the same property. Note that this incentive doesn’t apply to large utility-scale solar projects or systems owned by electric companies.

The Solar Equipment Sales Tax Exemption in Massachusetts eliminates the state’s 6.25% sales tax on solar energy equipment purchases. This means homeowners can save hundreds or thousands of dollars when buying solar panels, inverters, batteries, and other solar system components, as they won’t pay the standard sales tax that applies to most retail purchases.

This exemption applies automatically at the point of sale for qualifying solar equipment, so homeowners don’t need to apply for it separately or meet specific income requirements. The savings are immediate – if you purchase $20,000 worth of solar equipment, you’ll save $1,250 in sales tax. There are no deadlines or time limitations for this incentive, and it can be combined with other solar incentives like federal tax credits and state rebate programs to maximize your overall savings when going solar.

The ConnectedSolutions Battery Incentive is a Massachusetts state program that pays homeowners to share stored battery power during peak electricity demand periods. When you enroll your home battery system, the utility company can automatically draw power from your battery during high-demand times (typically hot summer afternoons). In exchange, you receive annual payments based on your battery’s contribution to the grid.

The program pays $275 per kilowatt (kW) for your battery’s average contribution during summer events. For example, a typical 5-kW battery system could earn up to $1,375 per year. Events occur no more than 60 times per summer between June 1 and September 30, from 3:00 p.m. to 8:00 p.m., with each event lasting a maximum of three hours. To participate, you must be a customer of Cape Light Compact, Eversource, or National Grid, and your battery system must use an approved inverter from manufacturers like Tesla, Enphase, SolarEdge, or others listed in the program. The battery can be installed with new solar panels, added to existing solar, or installed as a standalone system. Systems must be under 50kW in size, and the program includes 0% financing options up to $25,000 for battery purchases.

The Solar Massachusetts Renewable Target (SMART) Program is Massachusetts’ main state incentive program that pays solar system owners monthly cash payments for the electricity their solar panels produce. This tariff-based incentive is paid directly by your utility company (Eversource, National Grid, or Unitil) and runs for 10-20 years depending on your system size. The program uses a declining block structure, meaning incentive rates decrease as more solar capacity is installed across the state.

The financial benefit varies based on several factors including your utility company, system size, location type, and which capacity block your project falls into. Base compensation rates were set through competitive procurement, but specific dollar amounts depend on your individual project details. You can use DOER’s Value of Energy Calculator to estimate your potential payments. The program offers additional payment adders for qualifying projects, such as energy storage systems, agricultural installations, brownfield sites, and low-income properties.

To be eligible, your solar system must be interconnected with one of the three participating utilities in Massachusetts and receive approval from both the Solar Program Administrator (CLEAResult) and DOER. Applications are processed on a first-come, first-served basis within each capacity block. Important considerations include that some recent applications may receive $0.00 incentive rates due to higher electricity prices and the program’s declining structure, and projects are subject to specific land use and siting requirements that affect categorization and compensation rates.

Net Metering in Massachusetts allows homeowners with solar panels to receive credit for excess electricity they generate and send back to the power grid. When your solar system produces more energy than your home uses, that extra power flows to the grid and you receive credits on your electric bill. When you need more electricity than your panels produce (like at night), you can use these credits to offset your electric bill costs.

The financial benefits vary by utility company. National Grid, Eversource, and Unitil customers receive full retail rate credits (1:1 net metering), meaning each kilowatt-hour of excess solar energy earns the same credit as what you pay for electricity from the grid. These credits roll over month to month indefinitely as dollar values, and no annual cash payments are made. Taunton Municipal Light Department customers receive monthly net metering, where excess production above monthly consumption is credited at a lower generation rate of approximately 6.5-9.5 cents per kWh.

Most Massachusetts homeowners with solar installations are automatically eligible for net metering through their utility company. The program has no specific deadlines, but credit policies and rates can change over time. It’s important to understand that while credits accumulate indefinitely with most utilities, they remain as bill credits rather than cash payments, so maximizing your solar system size to match your annual electricity usage typically provides the best financial benefit.