The federal Investment Tax Credit (ITC) is the single most valuable solar incentive available to NJ homeowners — and at 30%, it's currently at its maximum level under the Inflation Reduction Act. Here's exactly how it works, who qualifies, and what you need to do to claim it.
The federal ITC allows homeowners who install solar panels to claim 30% of the total system cost as a direct credit against their federal income tax liability. Unlike a deduction — which reduces your taxable income — a tax credit reduces what you owe dollar for dollar.
On a $22,000 solar system in NJ, the 30% ITC equals $6,600 back on your federal taxes. This credit is claimed in the year your system is placed in service (turned on and interconnected).
The 30% credit applies to:
If your credit exceeds your tax liability in year one, the unused portion rolls over to the following year — you don't lose it.
Under the current IRA schedule, the 30% ITC applies through 2032, then steps down to 26% in 2033 and 22% in 2034 before expiring for residential systems in 2035. Political uncertainty around the IRA makes the long-term rate schedule less certain than it appears on paper — which is why many NJ solar advisors recommend acting while the 30% rate is confirmed.
Takes less than 2 minutes. No commitment required. Licensed NJ contractors only.