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 additional property taxes on that increase. The exemption covers the difference between your home’s assessed value with the renewable energy system and its assessed value without it.

To qualify for this exemption, your renewable energy system must be certified by your local enforcing agency (typically your municipal building department). You’ll need to submit a written application on a prescribed form, and 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 remains in use for its intended purpose. The local agency has the right to inspect your system and may require updated applications to verify continued eligibility. Keep in mind that the certification can be revoked if the system stops being used primarily for renewable energy or if there are significant departures from the originally certified design.

New Jersey’s Sales Tax Exemption allows homeowners to purchase solar energy equipment without paying the state’s sales tax. This exemption applies to solar panels, inverters, batteries, and other qualifying solar system components. Instead of paying the standard 6.625% New Jersey sales tax on these purchases, homeowners can use proper exemption certificates to buy solar equipment tax-free.

The financial benefit equals 6.625% of the total cost of qualifying solar equipment. For example, on a $20,000 solar system, this exemption would save homeowners approximately $1,325 in sales tax. To claim this benefit, homeowners or their solar installers must complete the appropriate exemption certificate (typically Form ST-4 for exempt use) at the time of purchase. The certificate must include the purchaser’s name, address, business type, reason for exemption, tax identification number, and signature.

Important considerations include that exemption certificates must be fully completed within 90 days of the sale date, and sellers must retain these certificates for at least four years. Homeowners should work with their solar installer to ensure proper documentation is completed, as improperly claimed exemptions can result in the purchaser being held liable for unpaid taxes, interest, and penalties.

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 clean energy their solar panels 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 offers $90 for every megawatt-hour (MWh) of solar electricity your system produces through New Jersey Solar Renewable Energy Certificates-II (NJ SREC-II). This means a typical home solar system generating about 10-12 MWh per year could earn $900-$1,080 annually in incentive payments. The program operates through two main tracks: the Administratively Determined Incentive (ADI) for smaller projects including all residential systems, and the Competitive Solar Incentive (CSI) for larger commercial projects.

All residential solar installations in New Jersey are automatically eligible for the ADI portion of the program, regardless of system size. The incentive payments are guaranteed for 15 years and begin once your system is operational and producing electricity. There are no application deadlines, but incentive levels may change as the program reaches capacity milestones. Homeowners should note that this program specifically supports net-metered solar systems, and the certificates are awarded based on actual energy production rather than system size.

Net Metering in New Jersey allows homeowners with solar panels to receive full retail credit for the excess electricity their system produces and sends back to the grid. This means you get a 1:1 credit – for every kilowatt-hour (kWh) of solar energy you don’t use immediately, you receive a credit equal to what you would normally pay for that same amount of electricity from your utility company.

The financial benefit works through a monthly credit system that carries over from month to month. Any excess credits you accumulate are settled annually during your “anniversary month” (typically the month your solar system was connected to the grid). At that time, remaining credits are paid out at the utility’s avoided cost rate, which is approximately 3-5 cents per kWh – significantly lower than retail rates. After this annual settlement, your credit balance resets to zero. You can change your anniversary month one time by contacting your utility company.

This program is available to customers of all major New Jersey utilities including PSE&G, Jersey Central Power & Light, Atlantic City Electric, and Orange & Rockland. The key consideration for homeowners is timing your solar production and usage to maximize the value of your credits, since any excess credits at year-end are compensated at the lower avoided cost rate rather than full retail value.