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 exemption ensures you won’t pay additional property taxes on that increased value.

The financial benefit is calculated as the difference between your home’s assessed value with the solar system versus without it. For example, if your solar installation adds $20,000 to your home’s assessed value, you won’t pay property taxes on that $20,000 increase. This can save you hundreds or even thousands of dollars annually, depending on your local tax rates and system size.

To qualify, your renewable energy system must be certified by your local enforcing agency as meeting state standards for renewable energy equipment. The system must be designed primarily to provide renewable energy for your building’s electrical, heating, cooling, or general energy needs. You’ll need to submit a written application under oath using forms provided by your local agency.

The exemption becomes effective for the tax year following certification and continues as long as the system is used primarily for renewable energy purposes. Keep in mind that the local agency can inspect your system and may revoke certification if the equipment stops functioning as intended or if you obtained certification through misrepresentation.

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 at purchase when proper documentation is provided to the seller, and there are no application deadlines or caps on the benefit amount.

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 for the solar electricity they produce over a 15-year period. The program aims to double New Jersey’s solar capacity by adding 3,750 megawatts of new solar generation by 2026.

For residential homeowners, the program pays $90 for every megawatt-hour (MWh) of solar electricity your system produces through New Jersey Solar Renewable Energy Certificates-II (NJ SREC-II). This translates to approximately $90-100 per year for every kilowatt of solar capacity installed on your home. Commercial properties receive different rates ranging from $70-120 per SREC-II depending on system size and installation type, with public entities like schools receiving an additional $20 bonus.

The program is available to all residential solar installations regardless of size, as well as commercial systems up to 5 MW that are connected to the grid through net metering. There are no specific application deadlines, but the program has capacity limits that could affect future availability. Homeowners should know that payments are guaranteed for 15 years once enrolled, providing long-term financial certainty for your solar investment.

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 grid and you receive a 1:1 credit on your electric bill – meaning you get full retail value for every kilowatt-hour (kWh) you contribute. This credit system is available through all major New Jersey utilities including PSE&G, Jersey Central Power & Light, Atlantic City Electric, and Orange & Rockland.

The financial benefit works like a bank account for electricity credits. Excess credits roll over from month to month throughout the year, helping offset your electric bills during times when your solar panels produce less energy (like winter months or cloudy periods). However, once per year 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 of approximately 3-5 cents per kWh, and your account resets to zero. You can change your anniversary month one time by contacting your utility if needed.

All solar customers in New Jersey are automatically eligible for net metering when they connect their system to the grid. There are no special applications or deadlines beyond your standard solar installation process. The key consideration for homeowners is understanding that while you receive full retail credit (often 10-15 cents per kWh) for excess energy during the year, any credits remaining at your anniversary will be valued at the much lower avoided cost rate, making it important to size your system appropriately for your annual energy usage.