Massachusetts Solar Rebates & Incentives 2023
Sticker shock is often the biggest barrier to installing a home solar system and enjoying the energy cost savings that comes with it. But Massachusetts has a handful of solar incentives that reduce this barrier and increase the benefits of going solar.
These incentives include:
- Sales and property tax exemptions
- State and federal solar tax credits
- Solar Massachusetts Renewable Target (SMART) program
- Net metering
- Municipal solar rebates
In this article, we’ll explore Massachusetts solar incentives and show you how they reduce the cost of an average-sized solar system.
So, let’s say you have a quote for a 6.5 kW solar system for $26,000. Here’s how the incentives would reduce the cost of that system.
Sales and property tax exemptions
The first Massachusetts solar incentive that would apply to your system is a state sales tax exemption. The sales tax rate in Massachusetts is currently 6.25%, so this exemption would save you $1,625 on a $26,000 system.
Massachusetts also has a 20-year property tax exemption for the home value added by your solar system. So, going solar can increase your home value, but it won’t increase your property taxes.
Related reading: 5 Reasons to Go Solar In Massachusetts
Solar tax credits
Next, there are two solar tax credits you can claim if you buy a solar system in Massachusetts.
First, there is the federal solar tax credit worth 30% of the price paid for the system. Then, there is a Massachusetts state solar tax credit worth 15% of the price paid for the system or $1,000 – whichever is less.
Here’s how solar tax credits would reduce the cost of a $26,000 system:
|Price paid for system||$26,000|
|30% federal tax credit||-$7,800|
|15% MA state tax credit||-$1,000 (max amount)|
It’s important to note that solar tax credits are claimed when you file your state and federal income tax returns for the year the system was deemed operational (passed inspection). The credits reduce your tax liability which can increase your refund and/or reduce how much you owe in taxes for the year.
If you don’t have enough tax liability to claim the entire credit in one year, they can be rolled into future tax years.
Solar Massachusetts Renewable Target (SMART) program
In addition to tax incentives, there’s the Solar Massachusetts Renewable Target program, known as SMART.
Through the SMART program, Massachusetts’ three investor-owned utilities – National Grid, Eversource, and Unitil – compensate homeowners on a monthly basis for their solar generation.
Each utility has a series of capacity blocks that determine the compensation rate, and the incentive decreases as the program progresses through the blocks. So, the sooner you go solar, the larger your compensation rate will be.
The table below shows the base compensation rates for each service area as of May 2023. However, compensation rates include the price of electricity. So, to get the true incentive value, you must subtract the price of electricity from the base incentive rate.
Given the rapid electricity price increases in 2022, true incentive rates for SMART are currently very low or zero.
|Utility||Block||Base compensation rate ($ per kWh)*||Price of electricity ($/kWh)*||True incentive rate ($/kWh)*|
|Eversource MA East||9 of 16||$0.25038||$0.24770||$0.00268|
|Eversource MA West||9 of 16||$0.21044||$0.23132||$0.00|
|National Grid (Nantucket)||3 of 4||$0.25704||$0.24323||$0.01381|
|National Grid (Massachusetts Electric)||10 of 16||$0.22463||$0.24323||$0.00|
|Unitil||5 of 8||$0.22619||$0.27753||$0.00|
*Rates via mass.gov as of May 2023
So, in the best-case scenario, you live in the National Grid Nantucket service region and your 6.5 kW solar system produces 9,000 kWh of electricity per year, you would earn $124 per year.
Over 10 years, that knocks $1,243 off your electricity bill, reducing the net cost of the system to $15,957.
|National Grid Nantucket customer||Eversource MA East customer|
|Price paid for system||$26,000||$26,000|
|30% federal tax credit||-$7,800||-$7,800|
|15% MA state tax credit||-$1,000 (max amount)||-$1,000 (max amount)|
|10 years of SMART compensation||-$1,243||-$241|
|Net cost of system||$15,957||$16,959|
The SMART program isn’t nearly as lucrative for solar owners as it was prior to the energy price spikes of 2022. However, it’s a nice cherry on the top for those that can get it.
Municipal solar rebates
There are also incentives for Bay Staters that get their electricity from municipal utilities. Several municipal utilities in Massachusetts offer rebates that can reduce the cost of going solar, including:
- Ipswich Electric Light Department
- Shrewsbury Electric & Cable Operations
- Wakefield Municipal Gas and Light Department
- Reading Municipal Light Department
- Hudson Light & Power
- Concord Municipal Light and Power
- Taunton Municipal Lighting Plant
These municipal rebates can be quite substantial. For example, the Wakefield Municipal Gas and Light Department offers $1.20 per Watt of solar capacity installed. That adds up to $7,800 for a 6.5 kW system (6,500 Watts).
It’s important to note that rebates effectively reduce the price paid for the system, which changes the value of the federal and state tax credits. Here’s how combining municipal rebates and the solar tax credits work in Massachusetts:
|Wakefield Municipal Gas and Light Department ($1.20 per W)||Concord Municipal Light and Power ($625 per kW)
|Gross cost of system||$26,000||$26,000|
|Municipal solar rebate||-$7,800||-$4,062.50|
|Price paid for system||$18,200||$21,937.50|
|30% federal tax credit||-$5,460||-6,581.25|
|15% MA state tax credit||-$1,000 (max amount)||-$1,000 (max amount)|
|Net cost of system||$11,740||$14,356.25|
While available to a small group of Bay Staters, municipal solar rebates are some of the most valuable solar incentives in Massachusetts.
Strong net metering policies
Perhaps the strongest solar incentive Massachusetts has to offer are the strong net metering policies available to most homeowners.
Net metering is the billing structure that allows solar owners to earn credit for the excess electricity their system pushes onto the grid. This credit can then be used to offset the cost of the electricity they pull from the grid when their panels aren’t producing enough electricity.
In other words, net metering allows homeowners to use both solar and grid electricity, while only paying for their solar system.
In Massachusetts, most investor-owned and municipal utilities offer 1-to-1 net metering policies. That means that the value of solar electricity pushed onto the grid is the same as the value of electricity pulled off the grid.
Massachusetts net metering policy is especially strong because it lasts for 25 years from the day a solar system is granted permission to operate (PTO) – which is the same as the typical warranty period for most solar panels.
Several states, including California and New York, are transitioning from net metering to other solar billing structures that are less favorable to homeowners. However, Massachusetts’ net metering policy seems to be safe for the time being.
Incentives make Massachusetts a great state for solar
What Massachusetts lacks in sunshine it more than makes up for in solar incentives. Between tax breaks, rebates, and the SMART program, Bay Staters can substantially reduce the cost of buying a solar system and increase their energy cost savings.
These incentives are especially important as Massachusetts’ electricity prices are among the highest in the nation. Solar incentives reduce the cost barrier of going solar and make clean energy and bill savings accessible to more homeowners.
Frequently asked questions
Is there a tax incentive for solar in Massachusetts?
Yes, there are several tax incentives for going solar in Massachusetts. Massachusetts has a tax credit worth 15% of the price paid for a solar system or $1,000, whichever is less. This state tax credit can be combined with the federal solar tax credit to reduce the cost of going solar by up to 45%.
Massachussetts also has sales and property tax exemptions for solar purchase. The sales tax exemption waives the 6.25% state sales tax on solar expenditures, worth $1,250 on a $20,000 system. The property tax exemption applies to the additional property value added by a solar system.
Are there rebates for solar in Massachusetts?
At least seven municipal utility providers (listed above) in Massachusetts offer rebates for residential solar projects. Although limited to small populations of municipal utility customers, these rebates can substantially reduce the cost and increase the savings of going solar.