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New Jersey offers TWO solar tax exemptions: sales tax exemption (6.625% saved = ~$2,200 on a $33K system) and 100% property tax exemption (solar adds $0 to your assessed value, saving $500-1,000/yr with NJ's sky-high property taxes at ~$9,500/yr average). Combined, these exemptions save NJ homeowners $3,000-$4,000 upfront plus hundreds every year.
The federal residential solar tax credit (Section 25D) expired December 31, 2025 under OBBBA. There is zero federal tax credit for homeowner solar purchases in 2026. NJ's state tax exemptions — sales and property — are now even more critical to solar savings.
New Jersey exempts solar energy systems from the 6.625% state sales and use tax. This saving is automatic — your installer applies it at the point of sale.
Calculation: $33,000 x 6.625% = $2,186.25 saved at the point of purchase
Smaller systems: $25,000 system = $1,656 saved. $40,000 system = $2,650 saved.
NJ has the highest property taxes in the nation (~$9,500/yr average). The 100% property tax exemption means solar adds zero dollars to your taxable value — a massive benefit that compounds every year.
NJ has the highest average property taxes in the nation at ~$9,500 per year. A 2-3% property tax rate means every $20,000 of added value costs homeowners $400-600+ per year in taxes. The property exemption eliminates this entirely — making NJ's annual exemption savings 2-3x higher than most other states.
Estimated annual savings based on $20,000 solar added value and county average tax rate. Actual rates vary by municipality.
| County | Avg Tax Rate | Annual Savings | 25-Year Savings |
|---|---|---|---|
| Bergen | 2.41% | $964 | $24,100 |
| Essex | 2.73% | $1,092 | $27,300 |
| Passaic | 3.05% | $1,220 | $30,500 |
| Morris | 2.29% | $916 | $22,900 |
| Monmouth | 2.19% | $876 | $21,900 |
| Ocean | 1.89% | $756 | $18,900 |
| Camden | 3.36% | $1,344 | $33,600 |
| Middlesex | 2.59% | $1,036 | $25,900 |
Note: Tax rates reflect combined county/municipal/school rates. Actual rates vary by municipality within each county. 25-year savings assume constant rates (actual savings may be higher with rate increases).
The sales tax exemption is automatic. But the property tax exemption requires you to notify your municipal tax assessor. Follow these steps.
The property tax exemption applies after your solar system is installed and operational. Your installer should provide you with all documentation including the final invoice, permit approvals, and inspection certificate.
Tip: Keep all installation documents in one folder. You will need the final invoice showing system cost and size.
Reach out to your municipal or county tax assessor's office. In NJ, property taxes are assessed at the municipal level, so contact your town's tax assessor directly. Ask about their process for the solar energy property tax exemption under N.J.S.A. 54:4-3.113a.
Tip: Find your local tax assessor at the NJ Division of Taxation website or your municipality's official site.
Provide the tax assessor with proof of installation: your final invoice, building permit, electrical inspection certificate, and a description of the system (size in kW, panel count, equipment type). Some municipalities have a specific form; others accept a letter with supporting documents.
Tip: Ask the assessor what specific documents they need. Requirements vary by municipality.
The assessor will review your documentation and apply the exemption to your property assessment. The added value of your solar system will be excluded from your taxable assessed value. Processing typically takes 2 to 8 weeks depending on the municipality.
Tip: If you installed before January 1 of the current tax year, the exemption should apply to the current year's assessment.
When your next property tax bill arrives, verify that your assessed value has not increased due to the solar installation. If the assessed value went up after solar was installed and no exemption is listed, contact your assessor immediately to correct the record.
Tip: Compare your assessed value from before and after the solar installation. They should be the same (or lower if the market declined).
In NJ, property taxes are assessed at the municipal level, not the county level. Each of NJ's 565 municipalities has its own tax assessor. Contact your town's assessor office directly — not the county, not the state, not the IRS. If you are unsure which municipality you are in, check your town's website or call your town hall.
NJ offers the strongest combined solar tax exemption package in the region. Here is how it compares.
| State | Sales Tax | Property Tax | Avg Prop Tax |
|---|---|---|---|
| New Jersey | Exempt (6.625% saved) | 100% exempt | $9,500 |
| New York | 4% state + local (NOT exempt) | 100% exempt (15 yrs) | $6,800 |
| Pennsylvania | Exempt (most goods exempt) | No exemption | $3,300 |
| Connecticut | 6.35% (NOT exempt) | 100% exempt | $6,400 |
| Delaware | No sales tax | Limited benefit | $1,600 |
NJ combines both exemptions with the nation's highest property taxes, resulting in the largest combined exemption value.
Even without the federal 25D tax credit, NJ stacks multiple incentives that add up to significant value. Here is how they combine for a typical 10 kW system.
Typical 10 kW System in NJ
System Cost: $33,000
Sales Tax Exemption
$2,186
One-time — upfront
Property Tax Exemption
$18,900+
~$756-1,344/yr x 25 yrs
SREC-II (SuSI/ADI)
$12,870
~$858/yr x 15 yrs
Net Metering
$37,500+
~$1,500/yr x 25 yrs
Estimated Total 25-Year Value
$71,000+
On a $33,000 system — NJ solar pays for itself 2x+ even without the federal tax credit
Estimates based on 10 kW system, 10,000 kWh/yr, $0.22/kWh electric rate, Bergen County tax rate. Actual results vary by location, usage, and rate changes.
Answers to the most common questions about NJ solar tax exemptions.
New Jersey offers two solar tax exemptions: (1) a sales tax exemption that eliminates the 6.625% NJ sales tax on solar energy system purchases, saving approximately $2,200 on a typical $33,000 system, and (2) a 100% property tax exemption that ensures your solar system adds zero dollars to your assessed property value for tax purposes. Combined, these exemptions save NJ homeowners $3,000 to $4,000 upfront plus $500 to $1,000 per year in avoided property tax increases.
The NJ solar sales tax exemption is automatic. When you purchase a solar energy system in New Jersey, the 6.625% state sales tax is not applied to the purchase. This covers the full system cost including equipment and installation labor. Your solar installer applies the exemption at the point of sale, so you do not need to file any paperwork or apply separately. On a $33,000 system, this saves you approximately $2,186.
Under N.J.S.A. 54:4-3.113a, solar energy systems are exempt from local property taxation in New Jersey. This means that even though installing solar panels increases your home's market value by approximately $15,000 to $25,000, your assessed value for property tax purposes does not increase. Given that NJ has the highest average property taxes in the nation at approximately $9,500 per year, this exemption typically saves homeowners $500 to $1,000 annually.
Yes. While the sales tax exemption is automatic, the property tax exemption requires you to notify your local municipal tax assessor. Contact your town's tax assessor office after your solar system is installed and operational. Provide documentation including your final installation invoice, building permit, and inspection certificate. The assessor will ensure the solar system value is excluded from your property assessment. Requirements vary by municipality, so ask your assessor what specific documents they need.
No. The federal residential solar tax credit (Section 25D) expired on December 31, 2025, under the One Big Beautiful Bill Act signed July 4, 2025. There is zero federal tax credit for homeowner cash or loan solar purchases in 2026. However, NJ's state incentives remain strong: the sales tax exemption, property tax exemption, SREC-II program ($85.90/MWh for 15 years), and full retail net metering still make solar financially viable. Third-party owned systems (PPA/lease) can still access Section 48 ITC through the financing company.
Annual savings depend on your municipality's property tax rate and the value your solar system adds to your home. For a typical system adding $20,000 in home value: in Bergen County (2.41% rate) you save approximately $964/year; in Essex County (2.73%) about $1,092/year; in Passaic County (3.05%) about $1,220/year; in Ocean County (1.89%) about $756/year. Over 25 years, this totals $18,900 to $33,600 depending on your location.
The NJ property tax exemption under N.J.S.A. 54:4-3.113a covers solar energy systems. Battery storage systems installed as an integral part of a solar energy system generally qualify for the same exemption. If you add battery storage after your initial solar installation, contact your municipal tax assessor to update your exemption documentation and ensure the battery value is also excluded from your assessment.
The NJ sales tax rate on solar energy systems is 0%. Solar equipment and installation are fully exempt from New Jersey's 6.625% sales and use tax. This exemption is automatic and applied by your installer at the point of sale. You do not need to apply for it or file any paperwork. The exemption covers the complete solar energy system including panels, inverters, racking, wiring, and installation labor.
New Jersey offers the strongest combined solar tax exemption package in the tri-state area. NJ exempts solar from both sales tax (6.625%) and property tax (100%). New York exempts property tax for 15 years but charges 4% state sales tax plus local sales tax on solar. Pennsylvania broadly exempts most goods from sales tax but offers no solar-specific property tax exemption. Connecticut exempts property tax but charges 6.35% sales tax on solar. Delaware has no sales tax statewide but minimal property tax benefit.
No. The NJ solar property tax exemption does not have an expiration date. Once your solar energy system is installed and the exemption is applied by your local tax assessor, it remains in effect for the life of the system. You do not need to renew the exemption annually. If you significantly upgrade your system (add more panels or battery storage), notify your assessor to ensure the additional equipment is also covered.
The sales tax exemption was a one-time savings at the time of purchase and is not transferable. The property tax exemption transfers with the solar system. When you sell your home with solar panels installed, the new owner continues to benefit from the property tax exemption. The buyer's assessed value will not include the solar system value. However, the solar system does increase the home's market value for sale purposes, meaning you benefit from a higher sale price while the buyer benefits from the ongoing property tax exemption.
For a typical 10 kW system costing $33,000 in NJ, the combined incentive value includes: sales tax exemption saving approximately $2,186 upfront, property tax exemption saving $500 to $1,000 per year ($12,500 to $25,000 over 25 years), SREC-II payments of approximately $858 per year for 15 years ($12,870 total), and net metering savings of $1,500 to $2,000 per year. Total incentive value over 25 years can exceed $40,000, making NJ one of the best states for solar even without the federal ITC.
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