Massachusetts Solar Incentives in 2022: The Complete Guide
Enough with the click-bait solar ads. You’re interested in adding solar to your home but need to know if you qualify for Massachusetts solar incentives in 2022.
Why won’t anyone just give you a list upfront? Because then you won’t make a home appointment with their sales rep.
Well we’re changing that today. Get ready for some grainy details. The truth is, the source pdf’s publicly listed on government websites are lonnnnnnng and dryyyyyyyy (how else would you describe this?). We’re going to give you these links to fact check everything we’re summarizing here, but we worked hard to condense about 200 total pages into this (much) shorter cheat sheet.
Massachusetts is one of the top ten states for solar energy with an average payback window of only 4-6 years. Let’s go ahead and jump right into all of the programs and rebates so you can make an informed decision on whether or not to go green.
Massachusetts Solar Tax Credits and Incentives
The first thing you need to know is all the solar incentives listed below are only available if you purchase the solar array. Whoever owns the installed system gets the solar incentives.
That’s important because many solar door-knockers will lead with a PPA (power purchase agreement) or lease agreement. When you lease or enter a PPA agreement with a solar company, you are forfeiting your right to both the federal tax credits and the recurring MA state incentive program.
This is the #1 reason we encourage our customers to own their own solar power systems with a financing plan if they do not have the funds to pay upfront (50% of our customers fall into this category, you’re not alone).
The Massachusetts Solar Tax Credit
Summary: New residential solar arrays in MA are eligible for a 15% tax credit applied to the fiscal year the array was installed.
This tax credit will either lower your state income tax bill or help get you a larger refund when you do your taxes. The MA Solar tax credit is also capped at a 450,000 reduction on your state taxes.
Excess credit amounts can be carried over on your personal income taxes for up to 450,000 off for three years
The Federal Solar Tax Credit
When you install solar panels you qualify for the 26% federal tax credit. The residential solar tax credit will drop to
Summary: When you install solar panels you qualify for the 26% Federal Residential Solar Tax Credit (sometimes referred to as the Investment Tax Credit or ITC).
This particular tax credit will drop to 22% in 2023, and it will end entirely in 2024.
26% means that the calculated credit is 0.26 times the aggregate total of the following:
- Cost of solar panels
- Labor costs for installation, including permitting fees, inspection costs, and developer fees
- Any and all additional solar equipment, like inverters, wiring, and mounting hardware
- Home batteries charged by your solar equipment
- Sales taxes on eligible expenses
Should I Finance Solar Panels?
If you have a quote from a solar installer already, ask your representative to confirm you are looking at the right total cost numbers.
NC Solar Incentives to Take Advantage of in 2023
Tis’ the season for change! It’s a new year and a great time to take control of your power. Whether you’re tired of paying high electric bills and watching utility rates increase, or you’re ready to switch to clean power, now’s the perfect time to look into your energy independence.
There are a number of powerful financial incentives available to North Carolina residential, commercial, and nonprofit solar projects in 2023. Here’s a rundown of national and local North Carolina solar incentives you may be eligible to tap into this year.
Upfront Tax DisclaimerWe are not tax professionals (surprise!) and this post does not constitute professional tax advice or guidance. If you end up going on your solar journey with us, we can connect you with Lucas Tax and Energy, a CPA specializing in energy related tax issues, that we keep on retainer as a service to our customers.
NC Solar Incentives Guide
Learn how North Carolina solar incentives stack up for homes, businesses, and nonprofits. Find out what you can qualify for and how much you can save!
New and existing NC homes that install solar in 2023 may be eligible to take advantage of the 30% Federal Solar Investment Tax Credit (ITC) for solar.
When this discount is applied to our average sized home solar system (around 7.7kW), you can expect to see roughly 10,500 off of our average turn-key price of 35,000. Let’s dive into the specifics in this section!
30% Federal Solar Investment Tax Credit for Homes
The 30% Federal Solar ITC was established in 2005 by the Energy Policy Act. At first it was intended to last one year, but after several sunny extensions we’re excited to report this incentive will be here to stay at 30% until 2032. You can learn more about the histor y of the tax credit and the most recent extension from the signing of the Inflation Reduction Act here.
How Does the Solar Tax Credit Work?
Since Jan. 1 2022, homeowners who pay federal taxes and have a solar system placed into service by the end of the year are eligible for a tax credit worth 30% of the cost of their system.
This means, for an average 35,000 solar system a homeowner can claim a 10,500 credit when filing their 2023 taxes. In this example, if they owe 11,000 in taxes, they will only need to pay 500 in taxes after claiming the solar ITC (11,000 – 10,500 = 500).
Are Solar Panels Worth It in Massachusetts?
The great part is, there’s no cap on the system value that can be claimed via the Federal Solar Tax Credit. However, there are limits on what is eligible to include in the system cost. System components that can be counted toward the credit include solar panels, racking/mounting equipment, inverters, balance of system (wire, conduit, junction boxes, etc), installation labor (including design, inspection, and permitting fees), and sales use taxes.
Note: energy efficiency upgrades are not included on the above list! We have seen several solar companies try to include items like insulation, LED bulbs, Smart thermostats, etc. as a solar system upgrade. These items are not eligible for the solar ITC.
500 Tesla Powerwall Rebate
Tesla is offering a 500 rebate for each Powerwall installed between now and October 31, 2023. Your Powerwall system can be installed by any Certified Tesla Powerwall providers (like us) to be eligible for this rebate. Once you register your Powerwall(s) with the Tesla app and submit a rebate request, Tesla will send you a check — simple as that! As a Certified Tesla Powerwall installer, we’d be happy to walk you through the process and get you started. Let us know you’re interested in some cash money from Tesla.
Duke Energy Solar Rebate for Homes
The Duke Energy Solar Rebate was a (highly competitive) one-time rebate available to homes, businesses, and nonprofits serviced by Duke Energy in North Carolina. The Duke Energy Solar Rebate began in 2018 as a result of House Bill 589 and concluded in January 2023.
Currently, there are no official plans for the Duke Solar Rebate to return in 2023. However, other solar incentives in North Carolina, such as the Federal Tax Credit, still make it a great time to start your solar journey.
The Countdown Has Started
Duke Energy’s solar net metering changes go into effect 10/1. Get your project started now to lock in legacy net metering benefits.
Other NC Residential Solar Incentives
With many new players joining the hot NC solar market, we’d like to throw out a word of caution to be skeptical if you see an “NC state tax credit” on your solar proposal. Beyond the incentives we’ve outlined, no other significant incentives are available at the Federal or state level in North Carolina. As always, when working with a solar installer, make sure pricing is transparent and terms are clearly defined. Here are a few other things to look for on your solar proposal.
Calculate Your Solar Savings
See solar on your home! Our solar calculator uses your home address, the details you provide, and LIDAR satellite technology (with a dash of AI) to give you a ballpark estimate of how much you could save by going solar.
There are even more solar incentives available for North Carolina businesses to take advantage of in 2023. When combined, the 30% Federal Solar Investment Tax Credit (ITC), Accelerated Bonus Depreciation, and the US Department of Agriculture (USDA) Rural Energy for America Program (REAP) Grant make it possible for businesses to offset 70-90% of the cost of going solar.
While situations where all 4 of these incentives stack together to reach 90% offset are rare, most of our commercial solar customers will see savings of between 40-70% on their solar system with some combination of those incentives.
30% Federal Solar Investment Tax Credit for Businesses
Since there is no cap on the amount you can claim via the Federal Solar ITC, businesses can also claim the 30% solar tax credit.
Businesses that pay federal taxes and have a solar system placed into service by the end of the year are eligible for a tax credit worth 30% of the cost of their system.
This means, for an average 205,000 solar system a business can claim a 61,500 credit when filing their 2023 taxes. This would bring the net cost of the solar system down to 143,500. Similar to a home solar system, there is no cap on a commercial solar system value that can be claimed using the Federal Solar Tax Credit. Spoiler alert: The savings get even more exciting when you factor in additional Bonus Deprecation savings on top of that.
information about the Federal Tax Credit can be found on DSIRE.
Federal solar tax credits
The federal residential solar tax credit covers 30% of the out-of- cost of a solar or solar storage system installed by Dec. 31, 2032. It is a dollar-for-dollar reduction of the income tax you owe. You must pay taxes to claim the credit. Learn more about federal solar tax credits.
Consult your tax professional to learn how tax credits and rules may apply to you. This information does not constitute tax advice and cannot be used to avoid tax penalties.
Oregon Solar Storage Rebate Program
Oregon offers rebates to homeowners who install solar electric systems or paired solar storage systems. Homeowners with low or moderate incomes qualify for higher rebates. The rebates are issued to approved contractors, who pass the savings on to their customers. Learn more about the Oregon Solar Storage Rebate Program.
There are several financing options available to help make installing solar electric systems more affordable.
Cash and loans
If you have the savings available, paying for your solar installation with cash will typically provide the highest return on investment and the quickest payback. A solar contractor can provide you with a proposal with specific figures.
Many homeowners use a loan to pay for some or all of their solar project. The loan could come from your existing bank, a financial institution that offers solar-specific loans, your solar contractor or even from the equipment manufacturer. Some lenders will allow you to pay down your loan principal when you receive your tax credit. With a loan, you benefit from significantly reduced utility costs and own the system outright at the end of the loan term.
We recommend exploring multiple financing options to find the solution that best fits your needs and budget.
Leases and Power Purchase Agreements
With a lease or power purchase agreement (PPA), you pay little or nothing upfront and the system is installed, owned and maintained by a solar service provider. You make lease payments or purchase the electricity produced by the system on a monthly basis.
The rate you pay for the solar electricity may or may not be less than your current electricity rate. When your agreement ends, usually after 20 years, you have the option to remove the system, renew the agreement or purchase the system. If you move, there are usually options for buying out the system or transferring the agreement to the new homebuyer.
If you choose a lease or PPA, Energy Trust will pay the incentive to your solar service provider, and you’ll receive a more affordable lease or power purchase price.
The solar service provider owns the Renewable Energy Certificates produced by your solar electric system. Learn more about Renewable Energy Certificates.
Read this guide to solar leases and loans for more information about your financing options.
How does the federal solar tax credit work?
The US government offers some of the best tax incentives for solar panels. As of 2022, you can now qualify for up to 30% of the total cost of your solar system as a tax credit.
Virtually any solar installation completed between 2017 and 2034 is eligible, but you can read detailed guidelines here. There are no income limits for the program, but because this incentive will come as a tax rebate, you do need to have taxable income to benefit from the credit, Fasullo said.
The total cost of the solar panel system, for the purposes of this program, includes not just the panels themselves, but also labor, installation and energy storage equipment.
What states have the best solar incentives?
Each state has a different mix of tax credits, rebates and net-metering policies that can offset the cost of a solar installation.
The economics, even without the tax credit, makes sense, Fasullo said of installing solar on your home. But these programs can sweeten the pot even more.
Here are the top seven states for solar incentives.
New York
Residents in New York can access a few different incentives. On the tax credit side, customers qualify for 25% of the solar system cost, up to 5,000. They can also qualify for sales tax exemptions, and if your solar panels generate excess power, net metering will pay you about
Why are some states more solar-friendly than others?
The solar tax credits that are available in your state depend largely on the utility companies.
Solar panels, because they allow you to generate your own electricity and rely less on the grid, have forced utilities to reshuffle their decades-old business model of building power plants and sending energy to households, Fasullo said. Not to mention the fact that, if your solar panels generate excess electricity, the utility has to start paying you.
All the utilities are scrambling because their business model is under attack, he explained. The less progressive utilities view [solar panels] as a threat.
So, in the states where utilities are still resisting solar panels, the incentives are likely to be less generous.- or just totally nonexistent. And in states where utilities have embraced solar, the rebates will be a lot stronger, Fasullo said.
Educate yourself on your utility, he advised. That could translate to rebates at the Hyper-local, municipal level, too. If your state doesn’t offer rebates, sometimes your town or city might step up to fill the gap.
.69 to 450.09 per kilowatt per month.
Idaho
Homeowners in Idaho can qualify for some significant rebates. The state offers a tax deduction of 40% of the cost of a solar system applied the year of installation, then a 20% deduction the following three years. Net metering policies will vary by utility, but the state also offers low-interest loans to help fund solar installations.
Illinois
Illinois is another state where, if you fall into the income requirements, you could qualify for a free solar installation. Other incentives include renewable energy credits that could cover about a third of the cost of a system, and property tax adjustments to lower your tax bill.
Maryland
Maryland residents have a few solar tax incentive options. Lower income customers can have the total cost of a solar installation covered by grants. The state also offers exemptions from sales tax and property tax increases. Net metering and solar renewable energy certificates in the state allow homeowners to gain extra income from the energy their panels generate, too.
Oregon
In Oregon, the incentives you can expect depend somewhat on your utility provider. Anyone in the state can access up to 5,000 off the cost of qualifying solar systems. But utility companies also offer rebates of as much as 450,500, as well as net-metering opportunities. Customers building new homes can also get an incentive to throw solar on the roof.
South Carolina
The South Carolina Solar Tax Credit is one of the most generous out there. It offers a tax credit of 25% of the cost of a solar panel system, up to 35,000 or 50% of the taxpayer’s tax liability for the year. The state also offers some property tax exemptions and net metering programs. Plus, Santee Cooper customers can qualify for another 5,700 rebate.
Texas
The state of Texas has a big range of solar incentives that depend a lot on where you live and who your energy provider is (the state’s energy system is deregulated, meaning customers can choose their utility). Some of the available rebates include a 5000,500 credit for customers in Austin, as well as net metering programs that vary by utility.