Paterson, NJ Solar Panels

New Jersey’s Property Tax Exemption for renewable energy systems allows homeowners to add solar panels or other qualifying renewable energy equipment to their property without increasing their property tax bill. When you install a solar energy system, your home’s value typically increases, which would normally result in higher property taxes. This exemption ensures that the added value from your renewable energy system is excluded from your property’s assessed value for tax purposes.

The financial benefit is straightforward: you pay property taxes only on your home’s value without the solar system, even though the system adds real value to your property. For example, if your solar installation increases your home’s assessed value by $30,000, that $30,000 remains exempt from property taxation for as long as the system operates primarily for renewable energy purposes. There is no cap on the exemption amount, and it continues year after year.

To qualify, you must apply for certification through your local construction code enforcing agency using their prescribed application form. Eligible systems include solar (photovoltaic and thermal), wind, geothermal, fuel cells, and other renewable energy technologies that provide electricity, heating, or cooling for your building. The system must be installed as an accessory to a residential, commercial, industrial, or mixed-use building and designed primarily to meet the energy needs of that building. The exemption becomes effective for the tax year following the year your system receives certification. Your local agency may inspect the property and can revoke the exemption if the system stops being used primarily for renewable energy purposes or if you obtained certification through misrepresentation.

New Jersey’s Sales Tax Exemption allows homeowners and businesses to purchase solar energy equipment without paying the state’s sales tax. When you buy solar panels, inverters, batteries, and other qualifying solar equipment in New Jersey, you won’t pay the standard 6.625% sales tax that normally applies to most purchases. This exemption applies at the point of sale, meaning you see the savings immediately when you make your purchase.

To claim this exemption, you’ll need to provide your solar equipment supplier with a properly completed exemption certificate at the time of purchase. The most commonly used form is the Exempt Use Certificate (Form ST-4), which your solar installer or equipment provider can help you complete. The certificate must include your name, address, reason for the exemption, and appropriate identification number. Sellers who receive a fully completed exemption certificate within 90 days of the sale are protected from liability, and you as the purchaser take responsibility for the proper use of the exemption. Keep in mind that this exemption applies specifically to the solar equipment itself—it doesn’t cover other taxable items like tools or supplies that aren’t part of the final solar installation.

The Successor Solar Incentive (SuSI) Program is New Jersey’s current solar incentive program that pays homeowners for the clean energy their solar panels produce. For every megawatt-hour (MWh) of solar electricity your system generates, you’ll receive one New Jersey Solar Renewable Energy Certificate-II (NJ SREC-II) that you can sell for a fixed price. This payment is guaranteed for 15 years, providing long-term financial benefits on top of your monthly electricity bill savings.

For residential solar installations, the program pays $90 per SREC-II. A typical home solar system produces about 10-15 MWh per year, which translates to approximately $900-$1,350 in annual incentive payments. The program launched on August 28, 2021, and is designed to support up to 3,750 megawatts of new solar capacity through 2026. All residential solar systems qualify for this incentive regardless of size, as long as they’re net metered (connected to the grid). The program replaced New Jersey’s previous SREC program and offers more predictable, stable payments that make it easier to calculate your solar investment returns over time.

Net metering in New Jersey allows you to receive full retail credit for the excess solar energy your system sends back to the electric grid. When your solar panels produce more electricity than your home uses, that surplus energy flows to the grid, and you receive a 1:1 credit on your utility bill. This means every kilowatt-hour (kWh) you export is worth the same as every kWh you would normally purchase from your utility company. During months when your system produces less energy—like winter—you can use these accumulated credits to offset your electricity costs.

All four major New Jersey utilities participate in this program: PSE&G, Jersey Central Power & Light, Atlantic City Electric, and Orange & Rockland (Rockland Electric). Your excess credits carry over from month to month throughout the year. Once per year, on your anniversary month (typically the date your system receives Permission to Operate), any remaining credits are reconciled. At that point, leftover credits are paid out at the utility’s avoided cost rate, which is approximately 3-5 cents per kWh, and your account resets to zero. You can contact your utility one time to change your anniversary month if needed. This program is available to all residential solar customers and helps maximize the value of your solar investment by ensuring you benefit from every bit of energy your system produces.