Solar Guide

New Jersey’s Property Tax Exemption for renewable energy systems allows homeowners to avoid paying property taxes on the added value that solar panels and other renewable energy equipment bring to their home. When you install a solar system, it typically increases your home’s assessed value, but this incentive ensures you won’t pay extra property taxes on that increase. The exemption covers the difference between your home’s assessed value with the solar system versus without it.

To qualify, your renewable energy system must be certified by your local enforcing agency, which requires submitting a written application under oath. The system must be designed primarily to produce renewable energy for your building’s electrical, heating, cooling, or general energy needs. The exemption becomes effective for the tax year following certification and continues as long as the system is used primarily for renewable energy purposes.

Important considerations include that the local agency can inspect your system and may revoke certification if the system stops being used primarily for renewable energy or if you significantly change the certified design. You have appeal rights if you disagree with any decisions made by the local enforcing agency or tax assessor.

New Jersey’s Sales Tax Exemption for solar energy systems allows homeowners to purchase solar equipment without paying the state’s 6.625% sales tax. This exemption applies to solar panels, inverters, batteries, and other components that are part of a residential solar installation, providing immediate savings at the point of purchase.

The financial benefit equals 6.625% of the total equipment cost. For example, on a $20,000 solar system, homeowners would save approximately $1,325 in sales tax. This exemption is available to all New Jersey residents purchasing qualifying solar equipment, regardless of income level or home type. The exemption applies automatically when purchasing from registered solar dealers who properly document the transaction with the appropriate exemption certificates.

To claim this exemption, homeowners typically work with their solar installer, who handles the paperwork by providing exemption certificates to equipment suppliers. The exemption must be claimed at the time of purchase – it cannot be applied retroactively. Homeowners should ensure their solar contractor is registered with New Jersey and properly documents all exempt purchases to avoid any future tax liability issues.

The Successor Solar Incentive (SuSI) Program is New Jersey’s current solar incentive system that replaced the previous SREC program in August 2021. This state program provides guaranteed payments to homeowners and businesses who install solar panels, helping make solar energy more affordable while supporting New Jersey’s goal of doubling its solar capacity by 2026.

For residential homeowners, the program pays $90 for every megawatt-hour (MWh) of solar electricity your system produces over a 15-year period. This payment comes in the form of New Jersey Solar Renewable Energy Certificate-II (NJ SREC-II) credits. To put this in perspective, a typical home solar system might generate 10-15 MWh per year, potentially earning $900-$1,350 annually in SuSI payments. The program also includes higher payment rates for certain commercial installations, ranging from $70-$120 per SREC-II depending on project size and type.

The program is available to all residential solar installations in New Jersey, regardless of size, as long as they are net-metered systems of 5 MW or less. There are no specific application deadlines mentioned, but the program has a total capacity target of 3,750 MW statewide through 2026. Homeowners should know that these incentive payments are guaranteed for 15 years once your system is approved, providing long-term financial predictability. The program took effect on August 28, 2021, and applications are processed through New Jersey’s clean energy programs.

Net Metering in New Jersey is a billing arrangement that allows homeowners with solar panels to receive credit for excess electricity they generate and send back to the grid. When your solar system produces more power than your home uses, the extra electricity flows to the utility grid and you receive a 1:1 credit on your electric bill – meaning you get full retail rate credit for every kilowatt-hour (kWh) you contribute.

The financial benefit works on a monthly rollover system where unused credits carry forward from month to month throughout the year. However, during your anniversary month (typically when your system first connected to the grid), any remaining excess credits are paid out at the utility’s avoided cost rate, which is approximately 3-5 cents per kWh – significantly lower than the retail rate. After this annual true-up, your credit balance resets to zero.

This program is available to solar customers across all major New Jersey utilities including PSE&G, Jersey Central Power & Light, Atlantic City Electric, and Orange & Rockland. While there are no specific eligibility restrictions mentioned, homeowners should understand that maximizing the value of net metering requires using most of your generated solar credits within the year, as the annual payout rate is much lower than the retail credit rate. You can request to change your anniversary month one time by contacting your utility company.