When it comes to solar energy for your property, you should know that different states have many incentives that can greatly reduce costs.
So today, we’re looking at states with the most generous solar incentives. We’ll explore these different incentives, how much money you could save, and the requirements for taking advantage of them.
- California, Maryland, Massachusetts, and New Jersey provide the best solar incentives in the United States.
- California has excellent solar incentives for low-income properties.
- Maryland offers wonderful tax exemptions for solar energy.
- Massachusetts has both tax exemptions and tax credits available for solar energy.
- New Jersey will “pay” you for generating extra solar power.
What Are the Federal Solar Incentives?
In the United States, you are incentivized to invest in solar energy. These incentives amount to tax credits, rebates, and other financial support for solar installations. So depending on your state, you could get cash back, a 100% tax exemption on solar/clean energy products, or even benefits toward tax purposes.
What Is Net Metering?
Net metering is a policy where solar panel customers can sell the extra electricity they generate back to their power company’s “grid.”
For example, if a person has solar panels in their home, they might produce more electricity than they use during the day. When that happens, the electricity meter will “run backward” if the house is net-metered. And basically, this offsets electricity expenses with the extra energy their solar panels create, effectively lowering energy bills.
States With the Most Solar Incentives
As a leading solar state, California’s net metering policy is highly attractive. The policy allows you to earn credits for the extra energy you generate at the same rate as you would pay for electricity. For example, if you pay $0.20 per kilowatt-hour for electricity, you’ll earn $0.20 for every extra kilowatt-hour your solar panels generate and send back to the grid. This lets California residents generate great savings on energy bills.
Property Tax Exclusion – Solar Energy Systems & Solar Plus Storage System
Most home and business owners will qualify for this property tax incentive. It applies to many solar energy products, such as water heat, space heat, thermal electricity, etc. And it’s even a 100% property tax exclusion. However, this doesn’t include dual-use solar equipment, which is a 75% tax exemption instead.
Homebuyer Solar Option and Solar Offset Program
If you have plans to buy a home in California, you can take advantage of the Homebuyer Solar Option and Solar Offset Program. This program is a building energy code incentive that simplifies meeting the energy efficiency requirements of a building’s code. It works by requiring production home sellers to offer prospective buyers a solar option and a solar offset program. Doing so can help homebuyers reduce the costs of their monthly electricity bills.
California Solar Initiative – Low-Income Solar Water Heating Rebate Program
This rebate program provides incentives to install solar water heating systems in low-income multi-family and single-family residences. The incentive for standard low-income residential buildings is a minimum of 25.64 per therm displaced, with a maximum of $3750.00. And for low-income multi-family buildings, the incentive is 19.23 per therm displaced, with a maximum of $500,000.00.
California Solar Initiative – Single-Family Affordable Solar Housing (SASH) Program
Another low-income Residential option is the SASH program. It’s a rebate program offering $3 per watt via CEC-AC rating and is for Solar Photovoltaics systems that serve low-income households. This is another excellent way to help make solar energy more accessible and affordable, especially for those who need it the most.
Like most states, Maryland residents can generate their own electricity using solar power and receive bill credits for the extra energy they produce. Combined with the below incentives, this can make solar energy much more attractive in Maryland.
Residential Clean Energy Rebate Program
You may be eligible for Maryland’s Residential Clean Energy Rebate Program if you’re part of any residential, multi-family, or low-income residential sector. It’s a great rebate program that can save you thousands for purchasing solar water heat, solar photovoltaics, or geothermal heat pumps.
- Solar water heat: Get up to $500 per unit
- Solar photovoltaics: Get up to $1000 per unit
- Geothermal heat pumps: Get up to $3000 per unit
Property Tax Exemption – Solar & Wind Energy Systems
Maryland citizens qualify for a residential property tax exemption when installing solar and wind energy systems. This applies to the majority of home and commercial properties. And the best part is that it’s a 100% tax exemption with no strings attached.
Sales and Use Tax Exemption – Residential Solar and Wind Electricity Sales
Business owners who sell solar and wind energy equipment for people’s homes do not have to pay taxes on what they sell. This is great for anybody who wants to use green energy and make their homes more environmentally friendly. Plus, it also helps businesses sell more green products as well.
Sales and Use Tax Exemption – Renewable Energy Equipment
This is another tax incentive but applies to more than just residential properties. It also applies to businesses, industrial, and agricultural entities as well. By eliminating 100% of the tax from renewable energy equipment purchases, this opens solar energy to a new range of customers and helps companies take advantage of the green energy upswing.
Net metering in Massachusetts offers a generous 1:1 ratio solar credit. So like California, this means you’re credited for the full retail value of all electricity you produce.
For instance, if electricity costs 19 cents per watt, you would get credits very close to being worth 19 cents per watt. Compared to other states, the generous 1:1 ratio helps Massachusetts residents save much more money on electricity bills.
Residential Renewable Energy Income Tax Credit
In Massachusetts, you can get a credit of 15% (up to $1,000) against your state income tax if you install a renewable energy system on your primary residence. This applies to residential properties and includes solar water heat, space heat, and different wind energy systems.
Renewable Energy Equipment Sales Tax Exemption
Massachusetts directly exempts 100% sales tax on solar and wind energy equipment. This helps customers save money on their green energy systems without having to worry about significant taxes on top of the purchase price.
Renewable Energy Property Tax Exemption
The law in Massachusetts says that solar energy and wind energy systems used to heat a home (or provide power) are exempt from local property tax for 20 years. The only caveat is they must be the primary or auxiliary power system to provide heat or other energy to the taxable property.
Residential & Small-Scale Solar Hot Water Program
The Massachusetts Clean Energy Center (MassCEC) provides rebates to people who install solar hot water systems in their homes or small businesses.
Here’s a list of potential rebates you can get under this program:
- Affordable Housing: $40,500 or 80% of eligible costs
- Commercial: $20,500 or 40% of eligible costs
- Non-Profit/Public Entity: $30,500 or 65% of eligible costs
- Residential property: $5,000-$30,500 per building or 40%-65% of eligible costs
Alternative Energy & Energy Conservation Patent Income Tax Deduction (Personal)
If you get money from selling or renting a patent that is good for energy conservation or alternative energy development in Massachusetts, you aren’t required to pay taxes on that income. You also don’t have to pay taxes when selling or renting property or materials covered by that approved patent.
New Jersey’s policies on net metering are much more generous than most people realize. Those who go solar in the state are credited for the full retail value of all electricity they produce. And thanks to the amount of sunlight New Jersey gets (about 2,500 hours per year) and the different solar energy incentives, it is one of the most giving states regarding this renewable resource.
Solar Energy Sales Tax Exemption
New Jersey exempts buyers from 100% of state sales tax for solar energy equipment. The exemption is available to all taxpayers and includes all types of solar energy equipment.
Property Tax Exemption for Renewable Energy Systems
New Jersey law states that people do not have to pay any local property taxes on energy systems that come from renewable resources. This includes systems used to power a home, heat and cool it, or for general energy needs.
Successor Solar Incentive (SuSI) Program
The SuSI program includes two parts. First, the Administratively Determined Incentive (ADI) Program, which provides solar energy incentives for residential projects of 5 MW or less. And second, the Competitive Solar Incentive (CSI) Program, which offers solar energy incentives for grid supply (and non-residential projects) greater than 5 MW.
This program works as a performance-based incentive. Basically, you are rewarded for generating electricity via solar energy. In fact, you can get $70-$100 per SREC-II under this program.