New Jersey residents can save a significant amount of money with solar panels are through federal and state incentives. Solar tax credits are a federal incentive that give homeowners a 26% credit that can be applied to their annual taxes. On top of that, homeowners can utilize New Jersey’s Solar Renewable Energy Credit (SREC).
Are you wondering how you can apply for these credits and take advantage of these incentives? Read on to learn more about these incentives and how you can use them!
Federal Tax Credits
Tax credits are a great way for residents who own their solar panel systems to earn money back. The Federal Tax Credit allows solar energy owners to deduct 26% of the cost of installing the solar system from their federal taxes.
The Federal Tax Credit applies to both residential and commercial systems. This credit can be applied to personal income taxes that would otherwise be payed to the federal government.
You qualify for these credits if you own your panels opposed to renting, installed in 2020 and actively generate electricity. When you’re ready to claim your credit, you are going to need to file IRS Form 5695 when doing your tax returns. You will be instructed to calculate your credit on the form.
This deal will not last forever. Residential and commercial solar energy system owners can deduct 26% of the cost of installation for systems that have begun construction through 2020. The tax credit then decreases in slow increments annually until 2021, where it is projected to stay at 10%. You’ll get the best deal if you switch to solar energy today!
NJ Solar Renewable Energy Credit (SREC)
New Jersey’s SREC program provides a means for these energy credits to be created and verified. Electric suppliers buy and retire these certificates in order to meet their solar Renewable Portfolio Standards (RPS) requirements. All electric suppliers must use the SREC program to demonstrate compliance with the RPS, as this law requires a minimum renewable energy generation percentage in the state. NJ SRECs were created to help our state reach its RPS target of 22.5% by 2021.
Homeowners are not required to meet this RPS goal, however you can receive credit from these companies for contributing to the generation percentage and removing some of the load on your neighborhood’s power grid.
It’s important to note that you are not selling energy from your solar panel system. The SREC credits are essentially proof of generating solar energy. Homeowners receive a power bill credit, which is a separate entity from SREC sales.
In order to benefit from this incentive, New Jersey residents must register their solar project with the SREC Registration Program before starting construction for their system. Once you are registered with the program, you are authorized to generate Solar Renewable Energy Certificates (SRECs).