By Solar Expert
August 18, 2026
The 30% federal solar tax credit is gone, and New Jersey homeowners are right to ask whether rooftop panels still make financial sense. The honest answer: for most owner-occupied homes with decent sun — whether you're in PSE&G, JCP&L, Atlantic City Electric, or Rockland Electric territory — going solar without the tax credit still pays, because the state's recurring benefits were always doing more of the work than the one-time federal discount. This guide covers what changed, what New Jersey still offers in 2026, and how to decide whether the post-credit math works for your home.
As of August 17, 2026: the federal Residential Clean Energy Credit (Section 25D) is repealed for homeowner-owned systems placed in service after December 31, 2025, while New Jersey's retail net metering and SuSI/SREC-II programs remain active.
Official sources (last checked: August 17, 2026):
The Residential Clean Energy Credit (Section 25D) was repealed by the One Big Beautiful Bill Act (2025), and IRS guidance confirms the credit is not available for any property placed in service after December 31, 2025. That means a New Jersey homeowner who buys and owns a solar system energized in 2026 gets no federal tax credit for it — full stop.
Section 25D let homeowners claim 30% of the cost of a purchased solar (or battery) system as a credit against federal income tax owed. Two details matter for the 2026 decision: it was a one-time benefit claimed at purchase, and it was nonrefundable — it could only offset tax you actually owed. Both details shape who really lost value in the repeal, which we cover below.
The commercial Investment Tax Credit (ITC) survived the repeal for business-owned systems — and that includes residential leases and power purchase agreements (PPAs), because the leasing company or PPA provider owns the equipment on your roof. You never file for that credit yourself; any benefit reaches you only through the monthly rate the provider offers. For a deeper look at how the federal rules shifted, see our guide to federal incentives changing in 2026 and their impact on solar projects.
Claim: A New Jersey homeowner who buys and owns a solar system placed in service in 2026 cannot claim any federal tax credit for it.
Evidence: The IRS Residential Clean Energy Credit page (last reviewed July 4, 2026) states the credit applies to property installed from 2022 through December 31, 2025 and is not available for any property placed in service after December 31, 2025, following the One Big Beautiful Bill Act (2025).
Yes — for most owner-occupied New Jersey homes with reasonable sun exposure and a meaningful electric bill, solar still pays for itself in 2026, just more slowly than when the federal credit existed. The repeal removed an upfront discount; it did not touch the recurring value streams that generate savings every month the system runs.
An owned NJ solar system earns its keep three ways: it offsets electricity you would otherwise buy at retail rates, it exports surplus power for net metering credits with your utility, and it generates SREC-II performance payments for 15 years under the state's Successor Solar Incentive (SuSI) program, administered through New Jersey's Clean Energy Program. All three continue for as long as the program terms and the panels do — typically 25 or more years of production. For current purchase pricing context, see our breakdown of what homeowners actually pay for solar panels in 2026.
The federal credit applied once, at purchase, and only to the extent you owed federal tax. The bill savings and SREC-II income arrive every year, and they compound as electric rates rise. Losing the credit stretches the payback period — it does not turn a sound investment into a bad one on a sunny roof with real usage behind it.
Claim: Most of a New Jersey solar system's lifetime value comes from recurring sources — monthly net metering bill offsets and 15 years of SREC-II payments — not from the one-time federal credit that ended.
Evidence: The federal credit applied once, at purchase. By contrast, net metering credits accrue on every utility bill for the 25-plus-year life of the panels, and New Jersey's Successor Solar Incentive (SuSI) pays a fixed amount per SREC-II generated for 15 years — so the repeal removed an upfront discount, not the engines that generate value year after year.
New Jersey still offers solar owners retail net metering, 15 years of SREC-II performance payments under the SuSI program, a sales tax exemption on solar equipment, and a property tax exemption for the value the system adds to your home. All four apply to the same owned system, and none reduces the others.
| Program | What it covers | Typical value / how it's calculated | Key eligibility | Source |
|---|---|---|---|---|
| SuSI / SREC-II | Performance payments for solar generation | Fixed payment per certificate (one SREC-II per megawatt-hour generated), paid for 15 years | Owned systems registered with the program before energization | New Jersey's Clean Energy Program |
| Retail net metering | Bill credits for solar power sent to the grid | Exported kilowatt-hours credited at retail rates against your usage | Customers of PSE&G, JCP&L, Atlantic City Electric, and Rockland Electric | NJBPU |
| Sales tax exemption | State sales tax on solar energy equipment | Equipment is exempt at the point of purchase, reducing upfront cost | Qualifying solar equipment purchased in New Jersey | NJ Division of Taxation |
| Property tax exemption | Home value added by the solar system | The system's assessed value is excluded from property tax | Qualifying renewable energy systems on NJ properties | NJ Division of Taxation |
Under SuSI, your system earns one SREC-II for every megawatt-hour it produces, and the program pays a fixed rate per certificate for 15 years. Registration must be completed under program rules before the system is energized, which is why the paperwork timeline belongs in your contract conversation, not after installation.
All four of New Jersey's electric utilities credit exported solar power against your consumption at retail rates. That is a stronger arrangement than many states offer, and it is the single biggest reason the post-credit math still works here.
New Jersey exempts solar equipment from state sales tax at purchase and excludes the system's added value from your property tax assessment. Neither is a headline number, but together they quietly trim both the upfront cost and the long-term carrying cost of ownership.
Claim: New Jersey's remaining solar benefits stack on one owned system — SREC-II income, net metering credits, and the sales tax exemption are separate programs that do not reduce one another.
Evidence: Each benefit operates through a different mechanism: SuSI/SREC-II is a performance payment administered under the NJBPU's program based on metered generation, net metering is a utility billing arrangement for the same kilowatt-hours, and the sales tax exemption applies at the point of equipment purchase — none is conditioned on declining the others.
Rising electric rates shorten solar payback, because every kilowatt-hour your panels offset is worth the retail rate you would otherwise have paid. New Jersey rates, including Passaic, have climbed in recent years, and each increase makes an existing solar system more valuable without the owner lifting a finger.
Net metering values your production at the retail rate on your bill. When PSE&G or JCP&L rates go up, the value of every self-consumed and exported kilowatt-hour goes up with them — the opposite of a fixed one-time discount like the repealed federal credit, whose value was locked at purchase.
The supply portion of NJ electric bills is set through annual state-run auctions, so cost pressures in the regional power market flow through to homeowners over time. A solar proposal priced on today's rates is therefore conservative: if rates keep rising, actual payback tends to arrive sooner than the estimate, not later.
Claim: When New Jersey utility rates rise, an existing solar system's savings grow automatically — the homeowner does not have to change anything.
Evidence: Under net metering, solar production is credited against consumption at retail rates on the utility bill. If the per-kilowatt-hour rate goes up, the value of every self-consumed and exported kilowatt-hour goes up with it — which is the opposite of a fixed one-time discount like the repealed federal credit.
Solar is still a strong buy for NJ homeowners with high bills, good sun, and long-term plans to stay; it is a weak fit for heavily shaded roofs, near-term movers, and homes with very low usage or a roof that needs replacement soon. Without the upfront federal credit, there is less cushion for a marginal site — so honesty about your situation matters more than ever.
The more electricity you use and the more sun your roof sees, the more there is to offset and the faster the system pays back. Homeowners planning to stay put for the long haul capture the full run of net metering savings and the 15-year SREC-II payment stream.
Heavy tree cover cuts production at the source, and a move within a few years means you may not stay long enough to reach breakeven. A roof due for replacement should be re-shingled before or alongside the install — removing and re-installing panels later adds cost that the post-credit math has less room to absorb.
Here is the counterintuitive part: many homeowners never captured the full 30% anyway. The old credit was nonrefundable, so a household owing little federal income tax — many retirees, for example — could not convert the full percentage into cash. For those homeowners, the 2026 economics look much like they did before the repeal.
Claim: For New Jersey homeowners with little federal tax liability — such as many retirees — losing the 30% credit changes the solar decision far less than headlines suggest.
Evidence: The Section 25D credit was a nonrefundable tax credit: it could only offset federal income tax actually owed (with carryforward). A household owing little federal tax could never convert the full 30% into cash, so the benefit they actually lost in the repeal was much smaller than the sticker percentage.
To make up for the lost federal credit, follow five steps: right-size the system, compare itemized quotes, choose your ownership structure deliberately, protect your SREC-II registration, and keep financing costs in check.
Every extra panel has to earn its keep through your bill and SREC-II production. Sizing from a full year of real usage — not a summer month or a salesperson's estimate — keeps the system lean and the payback tight.
Owning keeps the net metering credits, the SREC-II income, and the equipment in your hands. A lease or PPA trades those away for a lower entry price that may carry pass-through value from the provider's commercial ITC — whether that trade favors you depends entirely on the contract rate and escalator, so read both offers side by side.
SREC-II payments run for 15 years, but only for systems registered under the program's rules before energization. Make the registration filing an explicit line item in your contract so a paperwork slip does not cost you the state's largest recurring incentive.
Claim: A lease or PPA can still deliver federal tax-credit value to a New Jersey homeowner indirectly — but only through the provider's pricing, and usually in exchange for giving up SREC-II income.
Evidence: The commercial Investment Tax Credit survives the 2025 repeal for business-owned systems, and a leased or PPA system on a home is owned by a commercial entity. That owner claims the ITC and typically also keeps the SREC-IIs and system ownership, so the homeowner's benefit depends entirely on the contract rate — which is why the ownership decision deserves its own comparison.
No restoration is scheduled. The credit ended for property placed in service after December 31, 2025 under the One Big Beautiful Bill Act, and no replacement legislation is on the books. Base your decision on the incentives that exist today, not on speculation about future ones.
No — waiting has a real cost. Every year without solar is another year of full utility bills and forgone SREC-II income, and NJ program incentive rates can step down over time. If a new federal incentive ever appears, it would apply going forward, so it is not worth years of lost savings to wait for something unannounced.
Partially, yes. Net metering values solar production at retail rates, so when PSE&G or JCP&L rates rise, every solar kilowatt-hour is worth more and payback shortens automatically. It is not a dollar-for-dollar replacement of an upfront discount, but it compounds every year the system runs.
There is no hard statewide cutoff, but the smaller the bill, the less there is to offset and the longer the payback. Homes with very low usage should get a production estimate and an honest payback projection before buying rather than relying on a rule of thumb.
Yes. The old Section 25D credit was nonrefundable — it only offset federal income tax you actually owed. Retirees and other low-tax-liability homeowners often could not use the full 30% anyway, so for them the 2026 economics look much like they did before the repeal.
Homeowners with heavily shaded roofs, plans to move within a few years, a roof that needs replacement soon (unless it is bundled with the install), or very low electric usage. Without the upfront credit there is less cushion for a marginal site, so an honest site assessment matters more than ever.
The fastest way to know whether solar is worth it for your specific New Jersey home in 2026 is a proposal built on your last 12 months of bills — not on a national average. Roof orientation, shade, your utility's rates, and your SREC-II timing all change the answer, and none of them show up in a generic online estimate.
Claim: The fastest way to know if solar is worth it for your specific New Jersey home in 2026 is a proposal built on your last 12 months of bills — not on a national average.
Evidence: Payback depends on inputs that vary house to house: roof orientation and shade, your utility's rates, your actual kilowatt-hour usage, and your SREC-II registration timing. A proposal built from your own bill history and a shade analysis captures all four; a generic estimate captures none.
PowerLutions, one of New Jersey's top solar installers, builds proposals exactly that way: sized to your actual usage, with SuSI/SREC-II registration handled before energization and an honest payback estimate that includes no phantom federal credit. Call 732-987-3939 or email info@powerlutions.com for a no-pressure quote with the real 2026 numbers for your home.
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