Beyond the well-known federal tax credit, the state offers a full sales-tax exemption, a property-tax exclusion, and ongoing performance payments through the SREC-II program. Together, these incentives can cut the upfront cost of a system and speed up your return on investment. Here’s a clear overview of what you can expect, how each benefit works, and how SolarMe helps guide the process.
The Federal Tax Credit: 30% Through 2032
The federal Investment Tax Credit (ITC) trims your total system cost by 30 percent. That includes equipment (panels, inverters, racking), installation labor, and battery storage if applicable. For a system priced at $20,000, the credit covers $6,000. It is applied to your federal income-tax liability with IRS Form 5695 and can roll over to future tax years if needed.
New Jersey-Specific Incentives
1. Sales-Tax Exemption (6.625%)
Solar equipment in New Jersey qualifies as an “exempt use” purchase, so the homeowner gives the installer Form ST-4. This removes the 6.625% sales tax, saving about $660 per $10,000 in system cost on panels, inverters, batteries, and related hardware. Some contractors also collect Form ST-8 to cover labor as an exempt capital improvement, but the ST-4 alone is enough for most homeowners.
2. Property-Tax Exemption
Solar can raise a home’s market value, yet state law shields the added value of the array from local property taxes. File Form CRES with your code-enforcement office to record the exemption; the yearly savings depend on your municipal rate.
New Jersey’s policy mix targets both upfront and long-term savings. The federal credit provides a one-time tax benefit, while the state’s exemptions and performance payments chip away at installation cost and keep rewarding production throughout the system’s life.
3. SREC-II Credits via SuSI
The SuSI program pays solar owners for every megawatt-hour their systems produce. Registrations made after 13 March 2023 earn a fixed $85 per SREC-II for 15 years. Most residential arrays generate six to nine SREC-IIs each year, creating steady income that builds over time.
Financial Breakdown: A 7.2 kW Example
System cost: $19,800
Federal ITC (30%): – $5,940
Sales-tax savings: – $1,312
Property-tax savings: ≈ $400 per year (varies by county)
SREC-II income: ≈ $680 per year for 15 years
After factoring in these incentives, the effective first-year cost comes in around $12,500 while still delivering long-term value.
Upcoming Changes: Why 2025 Matters
The Board of Public Utilities will review SREC-II pricing in March 2026. Systems accepted before that review keep the current $85 rate for the full 15-year term; later projects could see a lower credit value.
How SolarMe Simplifies the Process
• Sales-tax exemption paperwork (ST-4, and ST-8 when needed)
• Property-tax exemption filing (CRES)
• SuSI registration for SREC-II payments
• Detailed documentation so your tax professional can claim the ITC
From planning to final inspection, our team keeps each form on track so every incentive is secured.
In Summary
New Jersey’s 2025 solar incentives make a strong case for acting soon. With federal and state support at full strength, the cost to go solar is lower than ever; move before the 2026 SREC-II review and you lock in premium production payments through 2041.
