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2026 Alert:
The federal residential solar tax credit (Section 25D) expired December 31, 2025 under the OBBBA. Cash and loan buyers receive $0 in federal tax credits.
Yes, Section 25D is dead. Cash and loan buyers get $0 in federal tax credits. But NJ is one of the best states in the country for solar in 2026 because of five incentives most states do not have.
OBBBA signed into law — kills Section 25D effective end of 2025
Section 25D expires — $0 residential ITC for cash/loan buyers
Potential 10% ADI rate decrease for new registrations (BPU may intervene)
Section 48/48E deadline — third-party owners must begin construction before this date
Most states relied on the federal ITC. NJ has five independent incentives that make solar financially viable even with $0 in federal credits.
$85.90/MWh for 15 years
The Successor Solar Incentive (SuSI) / Administratively Determined Incentive (ADI) pays $85.90 per MWh for the current energy year (EY2025-26). Payments are quarterly for 15 years from system registration. NJ is one of the only states with a dedicated solar production incentive this valuable.
Urgency: Rate may auto-decrease 10% on March 13, 2026. BPU has authority to intervene. Lock in current rate by registering before potential decrease.
Full retail credit for excess power
NJ net metering credits excess solar production at the full retail electricity rate (averaging $0.26/kWh across PSE&G, JCP&L, ACE, and RECO). Credits roll over monthly. Annual true-up pays out net excess at avoided-cost (wholesale) rate. Systems up to 5 MW eligible.
Urgency: Restructuring discussions underway. Systems installed under current rules are grandfathered. Lock in 1:1 rates now.
6.625% saved on purchase
All solar energy equipment and installation is exempt from NJ's 6.625% sales tax. On a 13 kW system costing $36,000-$41,000, this saves approximately $2,400-$2,700 at purchase. No application needed — applied automatically by installer.
Urgency: Stable policy. No changes expected.
100% exempt from property tax
Solar installations are 100% exempt from NJ property tax assessment. Your property taxes will not increase despite the added value of the solar system. This is especially significant in NJ, which has the highest average property taxes in the nation at ~$9,500/year. Without this exemption, a $36K-$41K solar system could add ~$800/year to your tax bill.
Urgency: Stable policy. Long-standing exemption in NJ.
10-40% bill savings, no rooftop needed
NJ's Community Solar Energy Program (CSEP) allows subscribers to receive solar bill credits without installing panels on their roof. 750+ MW capacity, 51% reserved for low-to-moderate income households. Available through PSE&G, JCP&L, ACE, and RECO service territories.
Urgency: Program extended through 2028. Enrollment available now.
Versus system cost of $36,000-$41,000. Solar pays for itself multiple times over — without any federal tax credit.
Section 25D (residential) is dead, but Section 48/48E (commercial) is still active. PPA and lease providers exploit it like this:
A financing company (not the installer, not you) owns the solar system on your roof.
As a business entity, they claim the 30% Section 48/48E ITC. This reduces their cost by ~30%.
The company passes ITC savings through as lower PPA rates (10-20% below retail rate) or lower lease payments.
The financing company (system owner) claims the 30% ITC.
The installer does NOT claim the credit. If a salesperson says the "installer" gets 30%, that is incorrect.
You do NOT claim any federal tax credit in 2026. 25D is dead.
PPA/lease projects must begin construction before July 4, 2026 for the third-party to claim the 30% ITC. After this date, PPA and lease rates will likely increase significantly because the financing company can no longer claim the credit.
Real numbers for a 13 kW system in NJ as of February 2026. No federal 25D credit for cash or loan.
| Method | Upfront Cost | Federal Credit | Payback | 25-Year Savings | Ownership | Best For |
|---|---|---|---|---|---|---|
| Cash Purchase | $36,000-$41,000 | $0 (25D expired) | 7-9 years | $60,000-$85,000 | You own it | Maximum long-term savings |
| Solar Loan | $0 down | $0 (25D expired) | 8-10 years | $40,000-$65,000 | You own it | Ownership without upfront cost |
| PPA | $0 | 30% via third-party (Sec. 48) | Immediate savings | $20,000-$40,000 | Third-party owns | No upfront, no maintenance |
| Lease | $0 | 30% via third-party (Sec. 48) | Immediate savings | $15,000-$35,000 | Third-party owns | Predictable monthly cost |
| Community Solar | $0 | N/A | Immediate savings | Varies (10-40% bill reduction) | No equipment | Renters, shaded roofs, condos |
Most states relied heavily on the federal ITC to make solar financially viable. NJ has multiple independent layers of incentives that most states lack.
NJ no longer has Section 25D — but neither does any other state. The difference is that NJ has the SREC-II/ADI program, 1:1 full-retail net metering, sales tax exemption AND property tax exemption. Most states that lost the ITC have no comparable substitute. NJ is better positioned for a post-ITC world than nearly any other state.
Automatic 10% decrease in ADI rate for new registrations. BPU may intervene, but there is no guarantee. Systems registered before this date lock in the current $85.90/MWh rate for a full 15 years.
Section 48/48E deadline for third-party projects. After this date, PPA and lease providers can no longer claim the 30% ITC. PPA/lease rates will increase significantly.
There are ongoing discussions about restructuring net metering in NJ. Systems installed under current rules are grandfathered at 1:1 rates. If net metering is reduced (as happened in California with NEM 3.0), new solar systems will receive less credit for excess production.
Installing now locks in the more favorable 1:1 rates — potentially saving thousands per year compared to future reduced net metering policies.
Straight answers to the most common questions about solar in New Jersey in 2026.
No. The federal residential solar tax credit (Section 25D) expired December 31, 2025 under the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. Homeowners who purchase solar panels with cash or a loan receive $0 in federal tax credits. This applies in every state, including New Jersey.
Yes. NJ is one of the best states for solar even without the ITC because of: (1) SREC-II/ADI payments of $85.90/MWh for 15 years (~$18,500 total for a 13 kW system), (2) 1:1 net metering at full retail rate (~$3,400/yr), (3) 6.625% sales tax exemption (~$2,400 saved), (4) 100% property tax exemption (~$800/yr saved in a state with $9,500/yr average property taxes), and (5) community solar for those who cannot install rooftop panels. Cash purchase payback is approximately 7-9 years.
With a PPA or lease, a third-party financing company owns the solar system on your roof. As a business entity, the third-party system owner can claim the 30% commercial Investment Tax Credit under Section 48/48E for projects that begin construction before July 4, 2026. The savings are passed through as lower PPA rates or lease payments. The installer does not claim the credit — the system owner (financing company) does.
The Successor Solar Incentive (SuSI) program's Administratively Determined Incentive (ADI) pays NJ solar system owners $85.90 per MWh of production for 15 years. For a typical 13 kW system producing ~14,700 kWh/year, that is approximately $1,265 per year or ~$18,500 over the full 15-year term. Payments are quarterly. This is a production-based incentive — you earn based on how much electricity your system actually produces.
A 10% automatic rate decrease for new ADI registrations is scheduled for March 13, 2026. However, the NJ Board of Public Utilities (BPU) has the authority to intervene and prevent or modify this decrease. Systems registered before the decrease date lock in the current $85.90/MWh rate for their full 15-year term. If you are considering solar in NJ, registering before March 13, 2026 is advisable to secure the current rate.
NJ offers 1:1 net metering, meaning excess solar production is credited at the full retail electricity rate (averaging $0.26/kWh). Credits roll over monthly to offset your bill. At the annual true-up, any remaining net excess is paid out at the avoided-cost (wholesale) rate, which is approximately $0.04/kWh. Systems up to 5 MW are eligible. All four NJ utilities (PSE&G, JCP&L, ACE, RECO) participate.
Nothing — your property taxes stay the same. NJ provides a 100% property tax exemption for solar installations. Despite your solar system adding $30,000-$40,000+ in value to your home, your assessed value and property tax bill will not increase. This is especially valuable in NJ, which has the highest average property taxes in the nation at approximately $9,500 per year. Without this exemption, a $36K-$41K solar system could add roughly $800 per year to your property tax bill.
A typical 13 kW residential solar system in NJ costs $36,000-$41,000 installed ($2.75-$3.15/W) with no federal tax credit available. This is the full out-of-pocket cost for cash or loan buyers. Before 2026, the 30% Section 25D credit would have reduced this by $10,800-$12,300. However, the sales tax exemption still saves ~$2,400 at purchase.
For a cash purchase of a 13 kW system in NJ, the payback period is approximately 7-9 years depending on your utility rate, roof orientation, and shading. This accounts for SREC-II income (~$1,265/yr), net metering credits (~$3,400/yr), and tax exemptions. Before the ITC expired, payback was 5-7 years. The increase is meaningful but NJ solar still pays for itself well within the 25-year panel warranty period.
NJ is better positioned than most states. Many states relied primarily on the federal ITC and net metering — without the ITC, solar economics deteriorated significantly. NJ has the SREC-II/ADI program ($85.90/MWh for 15 years), which no other state matches at this level. Combined with 1:1 net metering, sales tax exemption, and property tax exemption, NJ homeowners still have a strong financial case for solar.
Cash purchase produces the highest 25-year savings ($60,000-$85,000) because you keep 100% of SREC-II income and net metering credits. However, it requires $36,000-$41,000 upfront with no federal credit. A PPA costs $0 down, provides immediate savings (10-20% below retail rate), and the third-party owner can still claim the 30% Section 48 ITC for projects beginning construction before July 4, 2026. The gap between cash and PPA has narrowed significantly without the 25D credit.
July 4, 2026 is the deadline for the commercial/third-party Investment Tax Credit (Section 48/48E). Solar projects must begin construction before this date for the third-party system owner to claim the 30% ITC. This affects PPA and lease arrangements — after this deadline, the third-party cannot claim the credit, which means PPA and lease rates will likely increase. If you are considering a PPA or lease in NJ, signing before this deadline is important.
Community solar allows you to subscribe to a portion of a local solar farm and receive bill credits — without installing anything on your roof. NJ's Community Solar Energy Program (CSEP) has 750+ MW capacity with 51% reserved for low-to-moderate income households. Subscribers typically save 10-40% on their electric bill. It works in all four NJ utility territories (PSE&G, JCP&L, ACE, RECO). Ideal for renters, condo owners, homes with shaded roofs, or anyone who cannot install rooftop solar.
No — with a PPA or lease, the third-party system owner keeps the SREC-II/ADI payments because they own the system. However, the value of those SRECs is factored into your lower PPA rate or lease payment. With a cash purchase or loan, you own the system and keep 100% of the SREC-II income (~$1,265/yr for a 13 kW system). This is one of the main reasons cash purchase still produces the highest total savings in NJ.
No tax credit does not mean no value. See exactly how much you can save with NJ's incentive stack — SREC-II, net metering, and tax exemptions — customized for your home.
Free quotes, no obligation. Serving all of NJ.
Full overview of solar in NJ — costs, incentives, utilities, and next steps.
Detailed financing comparison with real 2026 numbers.
6.625% sales tax exempt + 100% property tax exempt — the numbers.
How SREC-II works, current rates, March 2026 rate change.
1:1 retail credit, how it works, potential policy changes.
750+ MW, 51% LMI set-aside, 10-40% bill savings.
$2.75-$3.15/W with city-by-city breakdown.
All NJ solar and heat pump guides in one place.
Last updated: February 2026. Data from NJ BPU, NJ Clean Energy, EIA, PSE&G/JCP&L/ACE rate schedules. This content is for informational purposes only and does not constitute tax advice. Consult a tax professional for your specific situation.