New Jersey

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 higher property taxes because of that increase.

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. The actual dollar savings depend on your local property tax rate – if your rate is 2%, you’d save about $400 annually on a $20,000 system value increase.

To qualify, your renewable energy system must be certified by your local enforcing agency through a written application process. The system must be designed primarily to provide renewable energy for your building’s electrical, heating, cooling, or general energy needs. The exemption becomes effective the tax year after certification is granted and continues as long as the system is used primarily for renewable energy purposes.

There are no specific deadlines mentioned, but you must apply for certification to receive the exemption. Keep in mind 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 equipment without approval.

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 issues during potential tax audits.

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 generate 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 offers $90 for every megawatt-hour (MWh) of solar electricity your system produces through New Jersey Solar Renewable Energy Certificate-II (NJ SREC-II) payments. These payments are guaranteed for 15 years and are separate from any savings on your electric bill. 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 net-metered solar installations of 5 MW or less, which includes virtually all residential systems. There are no specific application deadlines, but the program has capacity limits that could affect future availability. Homeowners should know that this incentive works alongside net metering benefits and federal tax credits, and the SREC-II payments will be made based on actual solar production measured by your system’s meter.

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 back to your utility company, and your electric meter literally runs backward, giving you a 1:1 credit for each kilowatt-hour (kWh) you contribute.

The financial benefit works like a bank account for electricity credits. Any excess credits you earn during sunny months can be carried forward month to month throughout the year. However, once per year during your “anniversary month” (typically when your system first connected to the grid), any remaining credits are cashed out at the utility’s avoided cost rate, which is approximately 3-5 cents per kWh. After this annual settlement, your credit balance resets to zero. This program is available through all major New Jersey utilities including PSE&G, Jersey Central Power & Light, Atlantic City Electric, and Orange & Rockland, with no specific eligibility restrictions mentioned beyond having an interconnected solar system.

One important consideration is that you can change your anniversary month one time by contacting your utility company, which might help you optimize when your credits are settled based on your energy usage patterns throughout the year.