Is Solar Still Worth It in New Jersey in 2026?
For many New Jersey homeowners, yes. The 30% federal tax credit is gone for systems you buy, which adds roughly two to three years to payback. But New Jersey still pays you for every unit of solar power you produce, still credits exported power at the retail rate, and still exempts solar from sales and property tax. Whether it works for your house comes down to your roof, your bill and how you pay.
Here is what changed, what did not, and how to run the numbers yourself.
What changed on January 1, 2026
The federal Residential Clean Energy Credit let homeowners take 30% of a solar system's cost off their federal income tax. Congress ended it in 2025. If your installation was completed after December 31, 2025, there is no federal credit for a system you buy with cash or a loan. The IRS guidance is clear that the completion date is what counts, not the date you signed.
If a quote you receive in 2026 still subtracts 30% from the price of a system you would own, the quote is wrong.
Prices have not dropped to make up the difference. Industry tracking from SEIA and Wood Mackenzie put the national average home system at $3.36 per watt in the second quarter of 2026, down just 1.4%.
What New Jersey still offers
New Jersey's own incentives were never tied to the federal credit, and they are still in place.
SREC-II payments. Under the state's Successor Solar Incentive program, a home system earns one certificate for every megawatt-hour (1,000 kWh) it produces. For systems registered on or after July 27, 2026, the residential rate is $77 per certificate, fixed for 15 years. Systems registered before that date locked in $85. Your installer handles the registration.
Net metering. When your panels produce more than your home is using, the extra flows to the grid and your utility credits it at the same retail rate you pay. Credits roll forward month to month. At your annual true-up, any surplus left over is paid at a much lower wholesale rate, so there is no benefit in building a system far bigger than your own use.
Tax exemptions. Solar equipment is exempt from New Jersey's 6.625% sales tax, and the value a system adds to your home is exempt from property tax.
A worked example: 7 kW in Essex County
This is an illustration with stated assumptions, not a quote.
- System size: 7 kW
- Installed price: $3.00 to $3.36 per watt, so $21,000 to $23,520
- Production: about 1,200 kWh per kW per year on an unshaded, south-facing roof, so 8,400 kWh a year. Check your own address with NREL's free PVWatts calculator.
- Electricity price: 23 cents per kWh, a statewide average. Use the all-in rate from your own bill.
| Item | Per year |
|---|---|
| Electricity you no longer buy (8,400 kWh × $0.23) | $1,932 |
| SREC-II payments (8.4 certificates × $77) | $647 |
| Total first-year value | $2,579 |
| Item | Bought in 2025 with the 30% credit | Bought in 2026 |
|---|---|---|
| Net cost | $14,700 to $16,464 | $21,000 to $23,520 |
| Simple payback | 5.7 to 6.4 years | 8.1 to 9.1 years |
The example leaves out loan interest, the slow decline in panel output over time and any future change in electricity prices. SREC-II payments stop after year 15; bill savings continue for as long as the system runs.
So the credit ending did not break the case for solar in New Jersey. It made it thinner, which means the accuracy of your production and price estimates matters more than it used to.
A note on bills: supply prices jumped about 17% for PSE&G customers and about 20% for JCP&L customers in mid-2025. The 2026 auction was close to flat, and the average PSE&G bill dipped by about $3 a month from June 2026. Be wary of any proposal that assumes steep increases every year.
Buy, finance, or lease?
Owning (cash or loan). You keep all the bill savings and all the SREC-II payments. You receive no federal credit. Over 25 years this is usually the highest total return, if you have the cash or a reasonable loan rate.
Lease or power purchase agreement (PPA). A company owns the system on your roof and you pay for its use or its power. That company can still claim a federal business credit on projects that began construction by July 4, 2026, or that are placed in service by December 31, 2027. Nothing requires it to pass that saving on to you, so ask in writing how the credit is reflected in your rate, what the yearly price escalator is, and what happens at the end of the term. With a lease, the SREC-II payments normally go to the owner, not you.
Neither is better for everyone. If you want the lowest lifetime cost and plan to stay, compare ownership first. If you want no upfront cost and no responsibility for the equipment, a lease or PPA with a low escalator can still beat your utility bill. You can read more about each option under cash, financing, lease or PPA.
When solar is not worth it
We would rather tell you now than after a site visit.
- Heavy shade from trees or neighbouring buildings that cannot be dealt with.
- A roof that needs replacing soon. Panels last decades, so they should go on a roof that will too. If yours is older, look at roof replacement and main panel upgrades at the same time as solar, not after.
- A low electric bill. If you spend little on electricity, there is little to offset.
- A move within a few years. You may not reach payback, and a lease has to be transferred to the buyer.
- A mostly north-facing roof with no usable south, east or west planes.
What about batteries?
A battery keeps essential circuits running in an outage. In New Jersey, where exported power is credited at retail rate, a battery does not usually add much bill saving on its own. There is no federal credit for a battery you buy in 2026.
That may change at state level. In August 2026 the Board of Public Utilities proposed a home battery incentive that would pay enrolled owners each year, over a 10-year term, for letting their battery support the grid during heat waves and cold snaps. The rules are not final. If backup power matters to you, ask for a system designed so a battery can be added later.
How to check your own numbers
- Find your annual kWh use and your all-in price per kWh on your electric bill.
- Run your address through PVWatts to see realistic production for your roof.
- Ask every installer for the price per watt, the first-year production estimate in kWh, and the assumptions behind the savings figure.
- Compare an ownership quote and a lease or PPA quote side by side over the same number of years.
New to the equipment itself? Start with how a solar system is put together.
Frequently asked questions
Did the federal solar tax credit end?
Yes, for homeowners who buy. It does not apply to installations completed after December 31, 2025.
Does New Jersey still have net metering?
Yes. Excess solar power is credited at the retail rate, with any annual surplus paid at a lower wholesale rate.
Will solar raise my property taxes in New Jersey?
No. The value added by a solar system is exempt from property tax.
How long does solar take to pay for itself in New Jersey?
In the example above, about eight to nine years for a purchased system in 2026. Your own figure depends on your roof, your price and your electricity rate.
Can I still benefit from a federal credit with a lease?
Indirectly. The company that owns a leased system may still claim a federal credit and can price that into your payment. Ask how.
Related services
- Solar 101: how a home solar system works and what to consider for your roof.
- Roof replacement: replacing aging, damaged or worn roofs before solar goes on.
- Financing: pay for upgrades through the company's lending partners.
- Battery storage systems: backup power for outages.
See what solar would do for your home
Upload your latest electric bill and a Solar Flex energy consultant will send a no-obligation estimate for your home, with the production, price and incentive assumptions written out so you can check them.
