Massachusetts Solar Tax Credit and Tax Exemptions

What solar tax breaks does Massachusetts offer?

Massachusetts gives home solar three tax breaks, all written into state law. Each one works a little differently:

• A state income tax credit of 15% of the net cost of the system, up to $1,000.
• A property tax exemption that keeps the system off your local tax bill for 20 years.
• A sales tax exemption on the solar equipment for your principal residence.

On their own, these are modest. Most of a Massachusetts system's value comes from the electric bill savings, plus the state's SMART 3.0 production payments. The tax breaks make that better by lowering what you pay and keeping the system's added value off your property tax bill. Our Massachusetts solar incentives page covers every program in one place.

How does the 15% Massachusetts solar tax credit work?

The credit is set by M.G.L. chapter 62, section 6(d). It equals 15% of your net expenditure on the system, or $1,000, whichever is less. Net expenditure means the purchase price plus installation, minus any federal credits and certain federal housing grants or rebates.

To qualify under the statute:

• The system has to be installed on your principal residence in Massachusetts.
• You can't be claimed as a dependent on someone else's return.
• You claim it on your state income tax return, using Schedule EC.
• The $1,000 limit is per home, not per year: any energy credit already taken on the same residence counts against it.

The credit can't be larger than the state income tax you owe for the year. If it is, the unused amount carries forward for up to three more tax years, so you have up to four tax years to use it.

Keep your signed contract, the final invoice and proof of payment with your tax records. Those show the cost you're claiming, and a tax preparer will ask for them when filling out Schedule EC.

Will solar panels raise your property taxes in Massachusetts?

For a typical home system, no. Clause 45 of M.G.L. chapter 59, section 5 exempts a solar system from local property tax for 20 years if it meets one of these tests:

• It produces no more than 125% of the property's yearly electricity needs, or
• It's 25 kW or smaller, or
• The owner has a payment-in-lieu-of-taxes agreement with the town.

A home system sized to your usage meets the first two easily. That matters because solar can add to your home's value, and the exemption keeps that added value from showing up on your tax bill.

Do you pay sales tax on solar panels in Massachusetts?

No. Under M.G.L. chapter 64H, section 6(dd), sales of equipment directly related to a solar system are exempt from the state sales tax when the system supplies energy to an individual's principal residence in Massachusetts.

You don't file anything for this one. The exemption is applied when the equipment is bought, so it's already reflected in your price.

Who can claim the Massachusetts solar tax credit?

The income tax credit is tied to what you spend to buy and install the system, so it goes to the buyer. Here's how each way of paying works out:

• Cash or loan: you own the system, so you claim the state credit, keep the SMART payments and get the property and sales tax breaks. A loan doesn't change that. If you're paying cash, keep in mind that the 30% federal homeowner credit ended for systems installed after December 31, 2025, so the state credit and SMART are now the main incentives for buyers.
• Lease or PPA: you get the value through a lower monthly payment or rate. The system qualifies for the 30% federal credit, which still applies to leases and PPAs, and the solar company passes that value along as a discounted rate. That's often a better deal than buying. Because the company owns the system, it claims the incentives directly. Leased systems also qualify for the 20-year property tax exemption.

Evergreen Solar offers cash, loan, lease, PPA and prepaid PPA options, so you can compare them side by side. Our guide to paying for solar in 2026 walks through each, and do you get a tax credit if you lease? explains the lease side in more detail.

How do the tax breaks stack with SMART 3.0 and net metering?

They all stack. None of the tax breaks reduces your SMART payment or your net metering credits, and a single system can earn all of them.

SMART 3.0 pays its flat rate on every kilowatt-hour your system produces, for systems of 25 kW or less that enroll in 2026. It's open to Eversource, National Grid and Unitil customers. Our SMART 3.0 guide covers the details.

Net metering credits your bill for the extra power you export, and small systems (10 kW or less on a single-phase connection, which covers most homes) keep full-value credits that roll over month to month. See net metering in Massachusetts for how that shows up on your bill.

In practice, the tax breaks are one-time or background savings, while SMART and net metering pay off every month for years. When you compare quotes, look for each one listed on its own line, so you can see which numbers come from your bill savings and which come from incentives. With a lease or PPA, ask how the incentives the system earns are reflected in your monthly payment or rate.

On an Eversource bill, net metering credits start only after the system is authorized to operate. They show under “Other Charges or Credits,” labeled “Net Mtr Crdt” in Eastern Massachusetts or “Net Metering Credit” in Western Massachusetts, and credits you don't use carry forward to later bills.

Does Mass Save pay for solar panels?

No. Mass Save is the state's energy efficiency program, and it doesn't offer a rebate or loan for solar panels. It does help with two upgrades that pair well with solar.

• Batteries: the Mass Save HEAT Loan, a 0% loan of up to $25,000 for up to 7 years, can cover a home battery enrolled in ConnectedSolutions, the program that pays battery owners for sharing stored power on peak days.
• Heat pumps: the HEAT Loan also covers heat pumps. Running your heat on electricity raises your usage, which a solar system can help offset.

The panels themselves are paid for with cash, a solar loan, a lease or a PPA. For loan options in the state, see solar loan programs in Massachusetts and Connecticut. To see what all of this adds up to for your home, call Evergreen Solar at (508) 507-2908.

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