With the price of solar declining 36% over the last five years and solar being more efficient than ever before, going solar is a great financial investment available for homeowners in 2020 in Massachusetts! Here is why.
The Federal Solar Tax Credit is one of the biggest solar incentives available in 2020. This income tax credit (ITC) entitles property owners to a 26 percent reduction in the cost of a solar energy system. For instance, purchasing and installing a qualifying solar project worth $20,000 will give you $6,000 back as a credit on your federal income taxes. However, remember that 2020 is the last year to qualify for this excellent discount of 26 percent. The ITC will decline to to 22 percent for energy systems installed in 2021. From 2022, only commercial building owners will get a 10 percent tax credit.
In addition to the ITC, you can benefit from a tax credit at the state level too – the Residential Renewable Energy Income Tax Credit. This financial incentive offers a credit of 15 percent on the net costs of your solar energy system. The amount is capped at a maximum of $1,000 that you will receive against your state income tax. Since this incentive is applied on top of the federal tax credit, it spells huge savings for a solar installation on your Massachusetts residence.
Residents of the state can also take advantage of the Solar Massachusetts Renewable Target (SMART) Program, which is a production-based financial incentive. According to the program, the major utility services Eversource, National Grid, and Unitil directly pay solar system owners a fixed rate for per kilowatt-hour (kWh) of solar energy sent to the grid. This rate depends on your utility company and location, and you can participate in the program for ten years.
However, the base rate may reduce, as the “blocks” on the incentive program keep getting filled and the state’s aggressive Renewable Portfolio Standard (RPS) target of 35 percent by 2030 is achieved. That’s why it is best to apply for the program at the earliest and enjoy high incentives.
Massachusetts is among the states in the country that offer net metering for solar customers. With this arrangement, you can earn credits on your utility bill against any extra energy produced by your property’s solar installation. The exact credit value will depend on factors, such as the size of your system and your location. But the benefits largely remain the same – you can claim the credit against the excess, unused energy generated on sunny days by your solar panels, and use it to pay your electricity bill during cloudy months when less power is produced.
Massachusetts also has excellent interconnection standards, which refers to the requirements concerned when connecting a solar energy system to the grid. The state has done away with fragmented guidelines and laid out standard interconnection guidelines for utility companies to comply with. This makes it less complicated for solar customers to plug into the grid and send power to utilities via net metering. Your local solar installer will be able to give you the details of the requirements that need to be met.
In addition to the federal and state financial tax credits, you can also enjoy exemptions on property tax when you get a solar installation on your Massachusetts property. The Renewable Energy Property Tax Exemption gives you a 100 percent exemption on property tax for a period of 20 years.
Typically, the value of a home or commercial property goes up with a solar energy system installation. This means that you will be charged added taxes on the building. But thanks to this exemption, you stand to save a considerable amount, in addition to increasing your home’s resale value. Moreover, you will save significantly on utility bills over the years as you use solar energy instead of regular electricity.
When you purchase a solar energy system in Massachusetts, you receive an exemption from additional sales tax, due to the state’s Renewable Energy Equipment Sales Tax Exemption. Applicable on residential installations, this incentive provides homeowners a 100 percent exemption on solar photovoltaics, solar water heating, and more.