The idea of solar panels is incredible. With the technology available today, you can switch to a eco-friendlier power source and even live independent of the power grid, if you choose. However, did you also know that you can save money in the process?
Most people agree that solar energy is a revolutionary concept. Although, when you look at the installation cost, your first impression is that it will burn a hole right through your wallet. It is an expensive home makeover project that most people would not want to take on, due to its initial expense.
However, when you peel back the layers, you find out that eventually, even expensive solar panel systems can help you save money and potentially earn money. New Jersey has created many incentives for its residents to entice them into switching to a more renewable energy source.
Solar Tax Exemption
New Jersey has always worked toward operating on fully-renewable energy. Granted, it might be a long process to get to 100%, but state legislation and solar technology have made great strides to start getting people interested in renewable energy.
One of those strides is the incentive for New Jerseians not to pay sales tax when purchasing a solar panel system. This incentive is called the PV energy sales tax exemption.
This incentive will require you to pay 7% less than if you were to purchase any comparable item since you are not paying sales tax. While 7% may not seem like a lot at first, think about it this way: if you spend $10,000 for a solar system, you can expect to pay around $700 in just taxes. So, with this incentive, you will save an extra $700.
Property Tax Exemption
Thanks to the property tax exemptions that were put forth by New Jersey, homeowners that live in New Jersey and have invested in a solar energy system will not have to pay additional property taxes on the value that their solar panels added to their home. For every 1 kilowatt of solar panels installed adds between $4,000-$5,911 to the home value. So if the average house had a 5-kilowatt solar panel installation, that house value increased by $20,100. In a normal situation, if the value of your house increased like that, you would have to pay property takes on that amount. However, with the property tax exemption, you won’t. So your home’s value increased, without you even having to pay extra taxes.
Federal Solar Tax Credit (ITC)
There are plenty of incentives for when you switch to solar. However, there is also a well-known federal tax credit that you can receive, also known as the ITC federal tax credit. This credit reduces the cost of your solar energy system by 26%. How it works is, you buy your system, and then, the next time you file your federal income taxes, you will receive a credit of 26% of the cost of your system. If the average price of a solar panel system in New Jersey is $12,388, this incentive will give you around $3,220 in tax credit.