By Solar Expert
March 2, 2026
New Jersey homeowners planning a solar installation in 2026 face a new reality: the federal 30% Residential Clean Energy Credit (Section 25D) has been repealed by the Big Beautiful Bill Act of 2025. That credit once covered solar panels, battery storage, and other clean energy systems. It is gone. But NJ still offers a strong package of state incentives — SRECs, sales tax exemptions, property tax exemptions, net metering, and the new Garden State Energy Storage Program — that can cut your total cost significantly even without the federal credit.
As of February 26, 2026: The federal Residential Clean Energy Credit (Section 25D) has been repealed. NJ state solar and storage incentives listed below remain active based on the most recent NJBPU filings.
Official sources (last checked: February 26, 2026):
The 30% federal Residential Clean Energy Credit (Section 25D) was repealed by the One Big Beautiful Bill Act signed into law in 2025. This credit previously covered solar panels, battery storage, geothermal heat pumps, and other qualifying residential clean energy equipment through 2032. It no longer exists for new installations.
Before the repeal, homeowners could claim 30% of their total solar system cost — including labor and equipment — as a dollar-for-dollar credit on their federal income taxes. For a typical NJ solar installation costing around $30,000, that was $9,000 off your federal tax liability. That option is now off the table.
This does not mean solar is no longer worth it in New Jersey, including solar in Lakewood. The state-level incentives that remain are among the strongest in the country. The key is understanding exactly what is still available and how to stack those programs.
Claim: NJ homeowners can still achieve strong returns on solar even without the federal credit, because the state incentive stack was always a major part of the financial equation.
Evidence: NJ's SuSI SREC-II payments, 100% sales tax exemption (6.625%), 100% property tax exemption, and net metering at full retail rate existed independently of the federal credit. For many homeowners, these state programs represented a larger cumulative benefit than the one-time federal credit over the life of the system.
New Jersey still offers five main solar incentives in 2026: SuSI SREC-II payments, sales tax exemption, property tax exemption, net metering, and the new Garden State Energy Storage Program for batteries. Here is what each one does.
The Successor Solar Incentive (SuSI) program replaced the original SREC program. Under SuSI SREC-II, residential solar systems earn fixed incentive payments per megawatt-hour (MWh) of electricity produced over a 15-year qualification life. You earn these payments on top of your electric bill savings. The payment amounts are set by the NJBPU based on system size and market conditions.
Solar energy systems and battery storage equipment are 100% exempt from New Jersey sales tax. At the NJ sales tax rate of 6.625%, this saves roughly $1,300 to $2,000 on a typical residential solar installation depending on system size. No application is needed — your installer applies the exemption at the point of sale.
New Jersey law exempts solar energy systems from property tax assessments. Your solar panels add zero to your property tax bill, even though they increase your home's market value. This exemption is automatic and does not require a separate application.
NJ net metering allows solar homeowners to send excess electricity back to the grid and receive bill credits at the full retail rate. Credits roll over month to month within your annualized billing period. This means your summer overproduction offsets your winter electric bills, maximizing the value of every kilowatt-hour your system produces.
Claim: NJ's state incentive stack — even without the federal credit — is one of the most valuable in the U.S. for residential solar.
Evidence: NJ combines recurring SREC-II income over 15 years, a 6.625% sales tax exemption on equipment, a full property tax exemption, and net metering at retail rate. Few states offer all four simultaneously. The SREC-II payments alone can total thousands of dollars over the system's qualification life.
The Garden State Energy Storage Program (GSEP) is a new NJBPU-approved incentive program specifically for battery storage systems in New Jersey. Approved by the Board on June 18, 2025, GSEP provides financial incentives for residential energy storage installations paired with or added to solar systems.
GSEP is designed to encourage battery adoption in NJ by reducing the upfront cost of storage. The program works through incentive payments that offset a portion of the installed cost. Eligibility and payment structures are defined by the NJBPU board order.
If you are considering adding a battery to your solar system, GSEP is a significant new benefit that did not exist before mid-2025. It directly addresses the higher upfront cost that has historically been the main barrier to residential battery adoption in New Jersey.
Claim: The GSEP approval in June 2025 created a new financial path for NJ battery storage that partially compensates for the loss of the federal credit on storage systems.
Evidence: Before GSEP, NJ had no state-level storage-specific incentive. The federal Section 25D credit (now repealed) was the primary financial offset for battery costs. GSEP fills that gap with a state-funded program, per the NJBPU board order dated June 18, 2025.
Here is a side-by-side comparison of the major incentives still available to NJ homeowners in 2026, now that the federal credit has been repealed.
| Program | What It Covers | Typical Value | Key Eligibility | Source |
|---|---|---|---|---|
| SuSI SREC-II | Per-MWh payments for solar production | Fixed $/MWh over 15 years (varies by system size) | Grid-connected residential solar in NJ | NJBPU / NJ Clean Energy Program |
| NJ Sales Tax Exemption | Solar and storage equipment | 6.625% savings on hardware costs | All NJ solar/battery purchases | NJ Division of Taxation |
| NJ Property Tax Exemption | Assessed value of solar system | 100% exemption (no added property tax) | All NJ residential solar installations | NJ Division of Taxation |
| Net Metering | Excess solar sent to grid | Full retail rate credits on electric bill | Grid-connected solar, utility-specific rules | NJBPU net metering rules |
| GSEP (Battery Storage) | Residential battery installations | Incentive payments (per NJBPU board order) | NJ residential storage, paired with or added to solar | NJBPU (approved June 2025) |
| Federal ITC (Section 25D) | Previously: 30% of system cost | REPEALED — no longer available | N/A | Repealed by Big Beautiful Bill Act (2025) |
Claim: NJ homeowners still have five active incentive programs for solar and storage in 2026 despite losing the federal credit.
Evidence: The table above lists SuSI SREC-II, sales tax exemption, property tax exemption, net metering, and GSEP — all currently active per NJBPU filings and NJ tax law. Only the federal Section 25D credit row shows "REPEALED," confirming the five state-level programs operate independently of the former federal benefit.
A typical NJ residential solar system costs roughly $25,000 to $35,000 before incentives, depending on system size, roof complexity, and equipment choices. Without the federal credit, the upfront cost is higher than it was in prior years. But the remaining NJ incentives still deliver substantial savings over the system's life.
The sales tax exemption saves roughly $1,600 to $2,300 at the point of purchase (6.625% of equipment costs). Net metering offsets most or all of your electric bill depending on system sizing. SREC-II payments provide ongoing income over 15 years. The property tax exemption protects your home's tax assessment from increasing.
For homeowners adding battery storage, the GSEP incentive further reduces the net cost. Combined, these programs can offset a significant portion of your total investment — just not all at once the way the federal credit did.
Claim: The loss of the 30% federal credit increases the payback period for NJ solar by roughly 2 to 4 years compared to pre-repeal estimates, but does not eliminate the financial case.
Evidence: The federal credit was a one-time upfront offset (typically $7,500 to $10,500 on a $25K–$35K system). Removing that amount increases the unrecovered balance in the early years. However, SREC-II payments, net metering savings, and tax exemptions continue to accumulate annually, eventually closing the gap. Most NJ systems still pay back within 8 to 12 years depending on electricity rates and system production.
Yes, new residential solar systems in NJ still qualify for the SuSI SREC-II program in 2026. The program is administered by the NJ Clean Energy Program and pays a fixed rate per megawatt-hour of solar electricity your system produces. The qualification life is 15 years from the date your system is registered.
SREC-II is separate from the original SREC program (which is closed to new participants). The payment rates under SREC-II are fixed at registration and do not fluctuate with the old SREC market. This gives homeowners more predictable income over the life of their system.
To enroll, your installer registers your system with the NJ Clean Energy Program after interconnection. There is no separate application for homeowners — the registration is typically handled as part of the installation process.
Claim: SREC-II provides more predictable income than the original SREC program because payment rates are fixed at registration.
Evidence: The original SREC program used a market-traded certificate model where prices fluctuated. SREC-II replaced this with administratively set fixed rates under the SuSI framework, which the NJBPU established to reduce uncertainty for residential solar adopters.
Yes, the NJ sales tax exemption applies to both solar panels and battery storage equipment. If you purchase a home battery system — whether paired with a new solar installation or added to an existing one — the equipment is exempt from the 6.625% NJ sales tax.
The property tax exemption also covers solar energy systems, which can include integrated storage. Adding a battery does not trigger a property tax reassessment for the solar and storage components of your installation.
For battery storage specifically, the new GSEP program adds another layer of incentive on top of the tax exemptions. This makes 2026 the first year NJ has offered a dedicated storage incentive, a sales tax exemption, and a property tax exemption simultaneously for residential batteries.
Claim: 2026 is the strongest year yet for NJ battery storage incentives, even after losing the federal credit.
Evidence: Before June 2025, NJ had no state storage-specific incentive. The only financial benefit for batteries was the federal Section 25D credit (now repealed) and the sales/property tax exemptions. With GSEP now active alongside those exemptions, the total state-level support for batteries is higher than at any prior point.
To get the best return on solar in NJ in 2026, follow these steps to maximize the remaining incentives.
Claim: Waiting for a federal credit restoration is unlikely to pay off, while rising NJ electricity rates increase solar's value every year.
Evidence: No current federal legislation proposes restoring the Section 25D residential credit. Meanwhile, NJ electric rates have trended upward consistently. Each year of delay means paying higher utility bills without solar offset, while available state incentive programs could change or reach capacity limits.
No. The federal Residential Clean Energy Credit (Section 25D) was repealed by the Big Beautiful Bill Act of 2025. There is no federal tax credit available for residential solar or battery installations in 2026.
Yes. The SuSI SREC-II program is active and pays residential solar owners a fixed rate per MWh of production over a 15-year qualification life. New systems installed in 2026 qualify for enrollment.
No. NJ law exempts solar energy systems from property tax assessments. Your solar installation will not increase your property tax bill.
GSEP is a NJBPU-approved incentive program for residential battery storage systems in New Jersey. Approved in June 2025, it provides financial incentives to reduce the upfront cost of home battery installations.
Yes. NJ net metering allows solar homeowners to earn bill credits at the full retail rate for excess electricity sent to the grid. Credits roll over month to month within your annual billing period.
Claim: NJ net metering credits at full retail rate remain one of the most valuable solar benefits nationwide, even without the federal credit.
Evidence: Many states have moved to reduced-rate or avoided-cost net metering. NJ still compensates solar exports at the full retail electricity rate, which is among the highest in the Northeast. This means every excess kWh your solar system sends to the grid offsets your bill at the same rate you would pay to buy that kWh — a benefit that compounds over the system's 25+ year life.
The federal credit is gone, but the NJ incentive package still makes solar a strong investment. SRECs, tax exemptions, net metering, and the new GSEP for batteries add up to real savings over your system's life. The best way to know exactly what you qualify for is to get a site-specific quote that factors in all current NJ programs.
Powerlutions helps NJ homeowners navigate the updated 2026 incentive landscape and design systems that maximize every available benefit. Contact us today for a free, no-obligation solar and battery quote.
Claim: A site-specific quote is the only reliable way to know your exact NJ solar savings in 2026, because incentive values vary by system size, utility territory, and roof characteristics.
Evidence: SREC-II payment rates vary by system capacity tier. Net metering savings depend on your utility's retail rate (PSE&G, JCP&L, and ACE each have different rate structures). Sales tax savings scale with equipment cost. GSEP incentive amounts are defined per the NJBPU board order and may vary by project type. Only a detailed proposal that accounts for all of these variables can produce an accurate savings estimate.
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