Last updated: December2024
Written by
Catherine Lane
Massachusetts homeowners can save an average of $7,570 with solar incentives when they install solar panels on their roofs. These incentives are part of the reason why Massachusetts is the best state for home solar in the entire country.
The Bay State also has some of the highest electricity bills in the U.S., meaning solar panels can save more money here than in most other states. But what solar incentives do you qualify for? And do they really make going solar worth it? Our guide to Massachusetts solar incentives can help you decide if going solar is right for your home.
Incentive | Estimated average annual savings | Eligibility | About |
|---|---|---|---|
Federal solar tax credit | $6,570 | All tax-paying U.S. citizens | Tax credit equal to 30% of installation costs, applied to federal income taxes |
Massachusetts Residential Energy Credit | $1,000 | All tax-paying MA citizens who install solar on their primary residence | Tax credit equal to 15% of installation costs up to $1,000 |
Solar Massachusetts Renewable Target (SMART) Program | Savings vary | Massachusetts residents who install solar panels in an eligible territory | Incentive payment of about $0.01 per kWh of solar energy a system produces, depending on location. |
Solar installation property tax exemption | $510, varies with tax rate, property, and solar system value | All tax-paying MA citizens who install solar on their primary residence | 100% of the value of the solar system exempt from property taxes for 20 years |
Home solar project sales tax exemption | Varies with equipment cost | All solar energy equipment | 100% exemption from state sales tax for solar energy equipment |
Quick Facts
Value: 30% of solar installation costs
Frequency: One-time tax credit, rollover for five years
How to apply: File IRS Form 5695 with annual tax return
Massachusetts residents can take advantage of the federal solar tax credit. The tax credit equals 30% of solar installation costs and reduces what you owe in federal income tax.
In Massachusetts, the average solar energy system will earn a tax credit of $6,570, but the amount you actually receive depends on the system’s cost, size, and the installer you choose. Solar installations financed using solar leases or power purchase agreements (PPAs) will not receive the federal solar investment tax credit.
Remember, the federal tax credit, sometimes called the ITC, doesn’t reduce the upfront cost of your system. You’ll still be responsible for paying the full price of the installation, but you’ll see the savings on your tax liability when you file your tax return.
Quick Facts
Value: 15% of solar installation costs, up to $1,000
Frequency: One-time tax credit
How to apply: File Schedule EC with annual tax return
Massachusetts is one of the few states that offers a state solar income tax credit. The Massachusetts solar tax credit is equal to 15% of solar installation costs up to $1,000. Most homeowners will earn the full $1,000 tax credit. Like the federal tax credit, the state tax credit will reduce your income tax liability.
Quick Facts
Value: $0.00779 - $0.013 per kWh of solar energy produced, where available
Frequency: Monthly for 10 years
How to apply: Apply online through utility company website
The Massachusetts SMART Program is a performance-based solar incentive that compensates solar system owners for the solar power they generate. The program provides savings in addition to net metering electricity bill savings.
As a declining block program, each investor-owned utility has a set of capacity blocks. As more solar is installed and the capacity blocks are filled, the incentive drops in value. This means it’s best to go solar as soon as possible to get the biggest incentive.
Currently, incentives are only available for Eversource customers in eastern Massachusetts and National Grid customers in Nantucket. Other utility customers do not receive incentive payments because the cost of electricity in these areas exceeds the planned incentive values.
Electric distribution company and territory | Solar incentive payment (per kWh) |
|---|---|
Eversource - Eastern Massachusetts | $0.00779 |
Eversource - Western Massachusetts | $0.00 |
National Grid- Massachusetts Electric | $0.00 |
National Grid - Nantucket | $0.01381 |
Unitil | $0.00 |
The Massachusetts Department of Energy Resources (DOER) is in the process of restructuring the SMART program for large and small solar projects.
Quick Facts
Value: 100% exemption of renewable energy system from property taxes
Frequency: Annually for 20 years
How to apply: Apply online through utility company website
One of the benefits of going solar is that solar panels increase the value of your home. Lucky for Massachusetts, the state offers a property tax exemption for renewable energy systems, like solar installations. This means your property value will increase with solar, but the value your solar panels add won’t change your property tax bills.
According to Smart Asset, the average effective property tax rate in Massachusetts is 1.12%. Using the state’s median home value and assuming solar panels add 6.8% to home value, we estimate the solar property tax exemption can save you an average of $510.
Quick Facts
Value: 100% exemption of renewable energy system equipment from state sales tax
Frequency: One-time exemption at the time of purchase
How to apply: File Massachusetts Tax Form ST-12 at the time of purchase
Equipment used for solar panel installations is exempt from Massachusetts’s 6.25% sales tax. Homeowners likely won’t have to worry about filing for this exemption, as the installers purchase equipment in bulk. However, it does indirectly help keep homeowners' costs lower.
Quick Facts
Electric rates average $0.29 per kWh in Massachusetts
Customers of Eversource, National Grid, and Unitil have access to net metering
Net metering credits equal between $xx and $xx per kWh
Actual net metering credits vary with your utility and rate plan
Massachusetts requires investor-owned utilities Eversource, National Grid, and Unitil to offer net metering to their solar customers.
Under net metering, the utility will measure how much energy your home uses from the grid and how much solar energy your solar panels produce. If your solar panel system produces more electricity than your home uses, you’ll earn a monetary credit on your bill.
Net metering bill credits are calculated differently for each utility but generally are worth the same or close to the full retail rate of electricity. Check your utility’s website for specifics of the net metering program available to you and how much you can earn for excess energy.
Massachusetts has some of the highest electricity costs in the country. Because of this, solar energy can significantly reduce electricity bills in the Bay State.
Homeowners looking to install solar batteries in Massachusetts can save on costs through various battery incentives and rebate programs.
The 30% federal solar tax credit can be applied to energy storage installations as well as solar panel installations! Even if your battery doesn’t pair with solar, you can still take advantage of the solar tax credit.
The Tesla Powerall 3 costs about $15,000 fully installed, which means it would qualify for a $4,500 tax credit.
The SMART Program provides adders that earn solar owners extra money when they install certain equipment, like solar batteries. The incentive adder you receive depends on the size of the battery and its power output, but it can be anywhere from an additional $0.02 to $0.07 per kWh.
Over the 10 year course of the SMART Program, that means a battery could earn you thousands of dollars.
The ConnectedSolutions Battery Program allows customers of Eversource and National Grid to earn money by allowing the utility company to discharge your battery when demand on the grid is high during the summer months. This reduces stress on the utility grid and helps prevent blackouts and price increases.
The incentive is based on how much power your battery supplies during grid events. The current incentive rate is $275 per kilowatt of power, meaning the average participant will save an average of $1,500 each year.
To participate in the program, you must have a battery from an eligible manufacturer. If you have a smart thermostat, you can also participate in a different form of the ConnectedSolutions program.
The average solar system in the Bay State is about 7.3 kilowatts (kW) in size, meaning solar panels in Massachusetts cost about $21,600 on average. This works out to about $3.00 per watt of solar installed. When you consider the federal and state tax credits in Massachusetts, solar costs are about $14,030.
State tax credit: $21,600 x 15% = $3,240 (incentive capped at $1,000)
Federal solar tax credit: $21,600 x 30% = $6,570
Total savings: $6,570 + $1,000 = $7,570
Effective system cost: $21,600 - $7,570 = $14,030
Solar panels are worth it in Massachusetts thanks to the state’s excellent tax incentive programs and extremely high energy costs. In fact, solar panels can pay for themselves in as little as five years, leaving you with 20 years of free electricity!
But solar panels are only worth it if you choose a reliable solar installer. It’s all too common to hear stories of dishonest sales practices and fly-by-night companies in the solar industry. So, it’s key for you to find a solar company that you feel confident in to support you for the 25-year lifespan of your solar panels.
That’s where SolarReviews comes in. We partner with trusted local solar companies to make your solar journey as easy as possible. Make sure you read customer reviews of the best solar companies in Massachusetts and get quotes from at least three companies before signing a contract so you get the highest-quality installation at the right price.
Catherine has been researching and reporting on the solar industry for five years and is the Written Content Manager at SolarReviews. She leads a dynamic team in producing informative and engaging content on residential solar to help homeowners make informed decisions about investing in solar panels.
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