Massachusetts residents are no stranger to high electric bills. The state consistently has some of the highest energy prices in the country. According to the U.S. Bureau of Labor Statistics, the average cost of electricity was 21.6 cents per kilowatt-hour in August 2018. That's 55.4 percent higher than the national average.1 High energy prices help make Massachusetts one of the most expensive states to live in. Standard utility rates aren’t getting any cheaper (this gap has been growing for the last five years) but solar actually is.2 Generating your own electricity with low solar rates can offset energy costs immensely.
While electricity continues to get pricier, residents have options to reduce their load. They can do this by using renewable energy. The state offers a variety of incentives for homeowners to use renewable energy in their homes.
In fact, Massachusetts offers some of the best residential solar incentives and tax credits available. Taking advantage of these cost-cutting opportunities helps Bay State homeowners embrace solar. It can save them money on monthly expenses too.
When you combine this decrease in cost with credits, repayments and tax breaks, you can save thousands of dollars over time. Here are some of the top solar tax credits and incentives available to homeowners in Massachusetts.
Massachusetts Solar Tax Credits
Residential Energy Credit
Massachusetts offers a state income tax incentive for renewable energy systems. The state income tax incentive is applied on individuals’ primary residences. Under this state tax incentive, Massachusetts residents receive a solar energy credit to reduce their personal income tax. The Massachusetts solar tax credit limit is equal to 15 percent of the net amount spent installing a rooftop solar system or $1000, whichever is less.3 If this amount is greater than the person’s tax liability, it can be carried over to the next year for up to three years.
Massachusetts Sales Tax Exemption
If you live in Massachusetts and you’re thinking about installing solar, you’ll be happy to know that your new solar equipment is 100 percent sales tax exempt. This is available for primary residences where the main source of power is clean solar energy.4
Massachusetts Property Tax Exemption
Homeowners are also exempt from any value added to their property taxes by installing solar equipment. This exemption lasts for 20 years after the install.5 That’s a significant amount of money! It can be redirected to your mortgage, retirement savings, or anywhere else.
Federal Tax Credit for Solar
Federal Solar Investment Tax Credit (ITC) in Massachusetts
The ITC is a 30 percent federal income tax credit for your solar investment. If you’re buying your solar panels, this federal credit is one of the best ways to lower upfront costs. This credit is for qualified expenses for the system, including labor and equipment. But don’t wait too long, because the ITC is set to reduce over time. Here’s a summary of the schedule.
- Solar projects in 2018 and 2019 are eligible for a 30 percent tax credit
- Solar projects in 2020 are eligible for a 26 percent credit
- 2021 projects are eligible for a 22 percent credit
- After 2021, the residential credit will drop to zero6
Massachusetts SREC II and SMART Utility Credits
SREC IIs and SMART are certificates that homeowners can sell to their utility providers for generating clean energy. This helps incentivize homeowners to use solar. It also helps utility companies reach their renewable portfolio standard (RPS).7
Massachusetts is currently transitioning from SREC II credits to SMART credits. Both enable solar homeowners to make money from generating clean energy but have slightly different payment structures.8
Homeowners can still apply for SRECs until the SMART program is in place. Final terms of the SMART program have not been set, but it will provide new, variable incentives for renewable energy systems.
Net Metering in Massachusetts
Customers with renewable energy can take part in net metering in Massachusetts, provided that their electric company allows it. Net metering allows homeowners in Massachusetts to earn credits on sunny days when solar panels are producing at their best. Once you have enough electricity to meet your home’s energy needs, any extra can be sent to the utility grid, earning net metering credit.
Several electric companies allow net metering in Massachusetts. These companies include Eversource, National Grid and Unitil. Companies have a cap on the amount of net metering they allow. So whether a customer will be permitted to net meter and how much energy they can transfer may vary based on the cap.
Net metering credit shows on your electricity bill as a dollar amount. It could reduce or eliminate your electric bill altogether. This is particularly helpful for homeowners in the Northeast where winter months mean shorter, cloudier days and less sunlight. Having a bank of net metering credits to draw from can lower electricity costs, even while heating your home through a long winter.9
Mass Solar Loan Program
This government loan program makes purchasing a rooftop solar system easy with a fixed monthly loan. With no big upfront investment and a low-interest rate, you still get the full benefits of purchasing your own solar system.10 It’s one of many great options for solar financing.
Benefits of Solar In Massachusetts
Hopefully, this article has helped you better understand some of the financial benefits to installing a renewable solar power system in a Massachusetts home. 10-15 years ago, the cost of going solar was so much higher, but thanks to advances in solar energy technology and government incentives, that’s no longer the case. At this point, there really isn’t a good reason not to look into solar energy short of lacking the necessary sunlight requirements.
Using solar energy in your home can be good for the environment and your pocketbook. Federal and state tax breaks can provide a short-term cost break. Other state incentives like the SMART program and net metering can also bring down energy costs over time. Take advantage of incentives to help reduce the cost of powering your home.
It’s an upfront investment that pays dividends in the years after the solar energy system was installed. But who can really put a price on lessening their carbon footprint and utilizing clean energy? Not only is solar energy good for you and your finances, but it’s good for the environment and your neighbors too. The more residential solar power we see, the better off everyone is who’s living in the state of Massachusetts. This is why the state offers so many tax incentives to reduce the initial cost of your bill. They want to encourage residential solar in the state.
Vivint Solar has been serving Massachusetts since 2012 and is proud to be part of the statewide solar boom. There are 354,256 homes in Massachusetts with solar installed.11 It’s an ideal time to take advantage of these Bay Stater incentives and add your home to that growing number.
Get a free quote to learn more about how much you could save by going solar!