New Jersey Solar Tax Credit

If you are thinking of installing solar panels in New Jersey, don’t do it learning about the best incentive available to solar owners – Investment Tax Credit. And here is our article on how to claim Solar Tax Credit in New Jersey.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) empowers both businesses and homeowners to claim a tax credit amounting to 30% of the total cost of a solar panel system. Unlike a rebate, the ITC directly diminishes the income tax owed.

This Solar Tax Credit is accessible to those who install solar panels before December 31, 2034. The credit gradually decreases to 26% in 2033 and further to 22% at the onset of 2034.

How does the New Jersey Solar Tax Credit work in practice?

In practical terms, if a household invests in a $20,000 solar panel system, they can deduct $6,000 from their income taxes, thereby reducing the net cost to $14,000. Any remaining credit can be carried over to subsequent years, providing a near guarantee of reclaiming the promised 30% incentive.

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To qualify for the ITC, ownership of the solar energy system is crucial, as leased systems do not meet the criteria. The system must be installed within the United States, and it should be either new or used for the first time. For those considering a PV installation on a boat or an RV, designate it as your second home.

How do I get a solar tax credit in New Jersey?

Claiming the Solar Tax Credit starts post-installation. Keep meticulous records of expenses related to your solar energy system, such as invoices, receipts, and documentation showcasing qualified expenditures like solar panels, inverters, mounting equipment, and labor costs. While submission is unnecessary, having these records is advisable in case of an audit.

For homeowners, claiming the Solar Tax Credit involves completing IRS Form 5695 and attaching it to your federal income tax return. Ensure your residential energy credit information is added to Schedule 3 (Form 1040) and file your tax return by the applicable deadline.

Need help? Follow our guide!

We cover filling out the forms for claiming ITC step by step

Step-by-step guide

Benefits of the New Jersey Solar Tax Credit

The cost reduction facilitated by the New Jersey Solar Tax Credit encompasses not only solar panels but also all associated equipment, shipping, and labor expenses. Importantly, there is no cap on the amount you can claim back.

Additionally, complementing the federal solar tax credit, New Jersey provides its own state-level incentives and rebates for solar installations. These programs further alleviate the upfront costs of installing a solar energy system. Explore more in our comprehensive guide on New Jersey solar incentives.

Julia Zaraeva

Author

Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.

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