What Massachusetts actually pays for solar, and who it pays
Start here, because half of what gets put in front of a nonprofit board is an incentive the organization is not eligible for. Program Year and statutory values current as of October 2026.
Any owner, including a church, school, housing authority or town
Paid in cash by your distribution company for 20 years, fixed at qualification under 225 CMR 28.13(1). Program Year 2026 rates by size: $0.2807 for 25 to 250 kW, $0.2430 to 500 kW, $0.2317 to 1 MW, $0.1790 to 5 MW. The behind-the-meter formula subtracts the value of the energy you already avoid, so this is a net adder on top of your bill savings, not a second helping of them.
Any owner with a parking lot
The largest location adder in the Program Year 2026 table and wide open to a church or school with asphalt. On a 300 kW canopy that is $0.2430 base plus $0.08, before netting the value of energy. Building mounted is $0.03, or $0.04 at 900 kW and above.
Affordable housing owners, including private nonprofits
Ten percent of the annual block is set aside for it. Requires a minimum 20 year agreement term. Proposed to rise to $0.06 for Program Year 2027. Community Shared is $0.07 and is falling to a proposed $0.06.
Municipalities and governmental entities only
Read 225 CMR 28.02 before you count on this. It reaches a Municipality or Other Governmental Entity holding a DPU public identification number. A church or a private school does not qualify, however charitable it is. Public applicants also get two procedural waivers a nonprofit does not, including relief from the executed interconnection agreement requirement.
Owners of systems sized to the building
M.G.L. c. 59 section 5 clause Forty-fifth, for a system producing no more than 125 percent of the annual electricity needs of the property, with a payment in lieu route for larger ones. If your real property is already exempt under clause Third, this adds little. It earns its keep on a leased or third-party-owned system sitting on exempt land.
501(c)(3)s with a certificate, and public entities
You already have this, and not through the solar provision. M.G.L. c. 64H section 6(dd), the solar exemption, reaches only an individual's principal residence. Exempt organizations come in under section 6(e) with a commissioner's certificate obtained first, and public entities under 6(d).
What Massachusetts will not do is write your organization a check through the tax system. The c. 62 section 6(d) credit is residential and capped at $1,000. Mass Save money is for efficiency and electrification, and the 2025 to 2027 plan carries no photovoltaic incentive. MassCEC currently lists no open solar capital program a private nonprofit can apply to. Every open Green Communities program is restricted to public entities.
Everything above lowers a bill. The federal credit sends you money.
Your organization owes no federal income tax, which for forty years meant the investment credit was worth nothing to you and your only route was letting a developer own the system. Section 6417 changed that. You claim the credit on a Form 990-T and the IRS pays it to you as a single payment. Not a discount, not a credit carried forward. A payment.
Base credit
Of eligible basis, where prevailing wage and apprenticeship are met or the facility is under 1 MW AC.
Energy community
Ten points on top, tested at the project's census tract or county. 31 qualifying tracts in Massachusetts.
Low-income communities
Section 48E(h), under 5 MW AC, and it has to be applied for and allocated. Not automatic.
Domestic content adds another ten points, and for an applicable entity it is also a condition. At 1 MW AC and above, for a project whose construction began after December 31, 2025, failing the domestic content requirement eliminates the elective payment unless an exception applies. Under 1 MW AC the condition does not apply at all. That one threshold decides how much of your procurement we need to see.
The questions that decide whether the stack holds
These are the questions Massachusetts organizations actually ask us, in the order they ask them. Each answer carries the authority it comes from, so you can check it or hand it to your board.
SMART takes our RECs. Do we still own the system, and can we still claim the credit?
Yes to both, and this is the question nobody in Massachusetts is answering. 225 CMR 28.07(1) says the GIS certificates and environmental attributes “shall be transferred directly to an account owned by the Distribution Company.” That is the attribute stream, not the asset. 225 CMR 28.10(1)(d) returns attribute ownership to you when the compensation period ends. Owner is defined throughout 225 CMR 28.00 as the entity with legal ownership of the unit, and the payments run to the Owner. Nothing in the regulation asks you to assign the equipment or an interest in it. The federal credit follows ownership of the energy property, and SMART does not move it.
Can we stack SMART, net metering and the federal credit?
All three, but SMART and net metering are not additive and proposals that model them that way overstate the project. 225 CMR 28.14(2) computes the behind-the-meter payment as base plus adders minus the value of the energy, where value of energy is the distribution, transmission and transition charges plus a three year average basic service rate. Every cent you avoid on the bill comes out of the SMART payment. The federal credit sits outside that formula entirely.
We are a nonprofit. Do we get the Public Entity adder?
No, and this is the most common disappointment in the Massachusetts market. 225 CMR 28.02 limits it to a Municipality or Other Governmental Entity holding a DPU public identification number. A church or private school is neither. What you can reach instead: Canopy at $0.08, Low Income Property at $0.05, Community Shared at $0.07, Building Mounted at $0.03, and Raised Racking at $0.04. Adders stack.
Our installer says the net metering cap might shut us out.
For a private behind-the-meter project over 25 kW serving on-site load with an interconnection agreement dated on or after January 1, 2021, the caps do not apply at all. 220 CMR 18.02 defines it as a Cap Exempt Facility Serving On-site Load and 18.07(5) takes it out of the aggregate calculation. The same definition expressly excludes a municipality, which has to take an allocation under the 8 percent public cap. On net metering, a church has the easier path than a town. The real schedule risk for you is the executed interconnection agreement, not the cap.
Should we build it bigger while the crew is here?
Two independent reasons not to. Net metering credits above your annual consumption, measured April through March, drop to the avoided cost rate under 220 CMR 18.04(4). And the property tax exemption in c. 59 section 5 clause Forty-fifth is keyed to a system producing no more than 125 percent of the property's annual electricity needs. Capacity expansions after your Statement of Qualification are generally not permitted under 225 CMR 28.10(2), so the size you qualify at is the size you keep.
Do we not get the Massachusetts solar credit?
No. M.G.L. c. 62 section 6(d) gives 15 percent of net expenditure capped at $1,000 to an owner or tenant of residential property who occupies it as a principal residence. It is a personal income tax credit, it is nonrefundable, and your organization is not a chapter 62 taxpayer. In Massachusetts the state money arrives through the utility tariff. The tax money is federal.
We are getting a state or utility incentive. Does that cut the federal credit?
No. There is no provision of Section 48 or Section 48E that reduces the credit because a state or utility incentive exists. Four things can reduce it, and a state incentive is not one of them: tax-exempt bond financing, a grant earmarked in writing for this specific property, a legacy Treasury grant under the 2009 recovery act, and a true cost-based rebate that reduces basis. Everything else stacks.
Can we take a tax-exempt grant and still claim the full credit?
Usually yes, and this is the answer most organizations get wrong. Treasury Regulation 1.6417-2(c)(3)(i) puts grant and forgivable loan money into the credit base “regardless of whether basis is required to be reduced (in whole or in part) by such amounts under general tax principles.” The limit is in the next paragraph: if the grant was given for the specific purpose of acquiring that property, the grant plus the credit cannot together exceed what the property cost. The regulation's own example: an $80,000 project with a $60,000 restricted grant and a $40,000 credit loses $20,000 of credit.
So how do we keep a grant from eating the credit?
It is decided by the grant document, not by your ledger. The test is whether the money was restricted to acquiring that one property, measured when the grant was awarded, or when a loan was approved. Funds that can go to several different credit properties, or to a credit property or something else, are not restricted. The regulation's fourth example treats HUD Capital Funds as unrestricted for exactly that reason. If you are still negotiating the grant, that sentence is the one to negotiate. Pub. 5884 says the IRS looks for a restriction the donor imposed in writing.
Does a performance payment per kWh reduce our basis?
There is no IRS guidance on that question, and anyone who tells you otherwise should show you the cite. What we can say: a payment for electricity delivered over 20 years is not money received to acquire the property, so it is outside the restricted grant rule, and it is not computed off installed cost, so it is not the kind of rebate that gets treated as a purchase price adjustment. The item that deserves real care is a single upfront rebate calculated from what the system cost. We paper the position either way.
Do tax-exempt bonds reduce it?
Yes, and this is the one reduction that bites in practice. Section 48E(d)(2) borrows the rule in Section 45(b)(3): the credit is reduced by the credit times the lesser of 15 percent or bond proceeds over cumulative additions to the capital account, measured at year end. The cap is 15 percent of the credit, not of basis, and it reaches any obligation whose interest is exempt under Section 103, not only private activity bonds. The 2025 tax act did not change it.
What about a state low-interest loan?
It no longer touches the credit. The reduction for subsidized energy financing was repealed for construction beginning after August 16, 2022. The heading on Section 48E(d)(2) still says “subsidized energy financing,” and so does a heading on Form 3468, but the operative text points only at the tax-exempt bond rule. If the loan is later forgiven you leave the financing question and land in the grant rule above, tested as of when the loan was approved.
Does anyone ask us about the grant?
Once, and not on the return. Pre-filing registration asks, for each investment-related credit property, the source of funds you used to acquire it, under Treasury Regulation 1.6417-5(b)(5)(vii)(E) and signed under penalties of perjury. Nothing on Form 990-T or Form 3468 asks about a grant, a rebate or a state incentive. If a grant lands after you file, there is an amended return path, and correcting it before the IRS opens an examination keeps you out of the 20 percent excessive payment penalty.
Have one we did not answer? That is usually the one worth a call. Send us the project and the incentive you are being offered.
Request a Scoping ReviewSolar has to be in service by December 31, 2027
Section 48E(e)(4), added by the 2025 tax act, says the credit “shall not apply to any qualified property placed in service by the taxpayer after December 31, 2027” where the facility is wind or solar. That termination reaches facilities whose construction began after July 4, 2026, which was three months ago. So unless your project was already under construction by then, the question is no longer whether you can start in time. It is whether you can be generating by the end of 2027, with interconnection, an executed agreement, permitting, procurement and construction in between.
Beginning of construction is now size-gated
Notice 2025-42 makes the five percent safe harbor available only to solar with maximum net output of 1.5 MW AC or less. Above that, physical work is the only route. This is a size test, not an entity test, and we see it misdescribed as a nonprofit carve-out.
Storage is not on this clock
Section 48E(e)(4)(C) excludes energy storage technology placed in service at the facility from the termination. A project that cannot make the solar window may still have a storage path.
Geothermal heat pumps are a different section
Ground source heat pump property stays in Section 48 with construction beginning before January 1, 2035. If that is your project, this deadline is not yours.
Tell us your placed in service date, or your expected one, and who owns the system. That is enough for us to tell you whether the calendar still works and what the credit is worth.
Check my timelineWhat the public record says about Massachusetts
Every figure below comes from a primary federal or state source and can be checked. Current as of October 2026.
Commercial power, per kWh
1.68 times the national average of 14.53¢, above the US mean. EIA Electric Power Monthly, July 2026.
Low-income community tracts
36% of the state's 1,620 census tracts qualify as Category 1 for the Section 48E(h) bonus. Allocation required.
501(c)(3) organizations
Of which at least 4,253 are classified by the IRS as churches. Exempt Organizations Business Master File, September 8, 2026.
Energy community status
31 census tracts in Massachusetts qualify on coal closure, and 7 counties qualify on the statistical area test (half the counties in the state). Status is tested at placed in service. Check the roof's census tract against the current IRS appendix before anyone claims this bonus.
Net metering
Class II to 1 MW and Class III to 1 to 2 MW under M.G.L. c. 164 section 138. A private behind-the-meter project over 25 kW serving on-site load, with an interconnection agreement dated on or after January 1, 2021, is exempt from the aggregate caps under 220 CMR 18.02 and 18.07(5). A municipality is expressly carved out of that exemption.
What we would check first in Massachusetts
Massachusetts is the best energy community state in the Northeast and almost nobody tells its nonprofits so. Seven of fourteen counties qualify on the statistical area test under Notice 2026-39, and 31 census tracts qualify on coal closure around the retired Brayton Point, Somerset Station, Salem Harbor and Mount Tom plants. Those 31 tracts have not moved since Notice 2023-29, which makes them the more durable of the two tests. One trap: Hampden County fails the Vintage 1 grouping and passes on Vintage 2, which is enough, because a county qualifies under either vintage. Hampshire County fails both prongs and still has five qualifying coal closure tracts.
SMART 3.0 under 225 CMR 28.00
Open to any Owner, defined at 225 CMR 28.02 as the entity holding legal ownership of the unit. No tax status condition appears anywhere in the regulation. Program Year 2026 applications run through December 31, 2026.
Read any financing offer for who ends up owning the system. A no-money-down structure that puts ownership with a third party moves the federal credit to them, and you receive a discounted rate instead of the payment. That is the most expensive sentence in this market.
These are completed engagements. We do not publish client names or addresses.
Four steps, and one of them has a queue
Step 1Confirm you own it
Elective pay reaches the owner of the energy property. If a developer owns the system and sells you power, the credit is theirs. This is settled before any tax analysis begins.
Step 2Price the credit
Eligible basis, the base rate, and every bonus the project can actually document. Sitework, roofing and interconnection are not automatically in basis, and an invoice total is not an eligible basis.
Step 3Register with the IRS
Pre-filing registration through IRS Energy Credits Online, one number per property. The IRS works these in the order received and does not expedite. Leave the number off the return and the election is ineffective.
Step 4File the return
Form 990-T carrying the election, with Form 3468 and Form 3800, and Form 7220 where prevailing wage and apprenticeship apply. An enrolled agent signs it and holds your Form 2848.
Find out what your credit is actually worth in Massachusetts
Tell us the placed in service date, who owns the system, and roughly what it cost. That is usually enough for us to tell you where your filing stands, what the credit is worth, and whether any bonus applies, before anyone commits to anything.
Request a Scoping Review