The New Mexico state government will credit you on your taxes if you install solar as part of your sustainable building efforts on your home. In order to qualify, your home needs to be certified sustainable by the U.S. Green Building Council, and the value of the credit is determined by your certification level. You could earn as much as $6.50 per square foot for having a sustainable solar.
For property owners in New Mexico, perhaps the best state solar incentive is the state's solar tax credit. This incentive can reduce your state tax payments by up to $6,000 or 10% off your total solar energy expenses (whichever is lower). The tax credit applies to residential, commercial, and agricultural installations.
Don’t forget about federal solar incentives! With the Investment Tax Credit (ITC), you can reduce the cost of your PV solar energy system by 30 percent.
The federal solar tax credit has open eligibility and is available to all New Mexico residents. The credit gets applied to your federal income tax liability for the year your solar panel installation is completed and turned on. The credit totals 30% of your total solar project cost.
The Solar Market Development Tax Credit is a statewide credit that gets applied to your state income tax liability for the year your system is installed and turned on, and the credit can carry over for five additional years if you cannot claim the entire credit at once.
Although the federal tax credit is available to all taxpayers across the nation, many states provide an additional state tax credit to further incentivize homeowners to convert to clean energy. New Mexico Aims To Be Fossil-Fuel Free By 2045, Despite Oil Boom New Mexico lawmakers passed a bill this week mandating state utilities use 100 percent renewable energy by 2045. New Mexico’s PNM has a renewable goal of 100% by 2040.
To help achieve this, New Mexico has a state tax credit to incentivize homeowners to go solar. The credit disappeared for four years but was reinstated in 2020. Homeowners throughout New Mexico can qualify for a 10% tax credit that gets applied to their state income taxes owed for the year the PV system is installed and commissioned.
If your state income taxes owed for the year you go solar are less than this amount, you can roll the remaining credit over for five years after your system is installed.
New Mexico seeks to reduce the financial burden of going solar by offering tax exemptions. New Mexicans can enjoy both a sales tax exemption and a property tax exemption.
The property tax exemption stops the spike in property taxes, which means you’ll enjoy a bump in value but won’t have to pay taxes on the added value like you would with any other home improvement. Over the life of your solar power system, this could mean a savings of thousands of dollars in taxes. This is especially true in areas like Albuquerque and Santa Fe, where property taxes tend to be higher.
New Mexico has a net metering policy that credits you for the extra electricity your system produces and allows you to use those credits when your system doesn’t generate enough power.
Net metering is a billing option available throughout most of the U.S. that help homeowners with photovoltaic systems eliminate or significantly reduce their electric bills.
Even after you install solar panels, you’ll still need to pull electricity from the grid when your panels don’t produce enough energy — like at night or on especially cloudy days. You’ll be billed for whatever you pull from the grid.
However, you can also produce more power than you need on sunny days or when no one is home using electricity. Net metering states that your bill for energy pulled will be reduced by whatever excess energy you send to the grid.
In case all of the above incentives weren’t enough to entice you to switch to solar energy, there are some additional local incentives provided in the Land of Enchantment.
The state has solar easement laws that guarantee all taxpayers access to solar panels and sunlight. That means strict homeowners associations, cities, villages, and other governing bodies cannot prevent you from installing solar panels or enjoying full access to sunlight.
Some municipalities and utility companies in New Mexico also offer rebates for energy-efficiency updates, and others provide energy tax credits.
You should check with your utility company or the DSIRE database for rebates. The credits are usually provided only to commercial customers or for homeowners building new homes via the Sustainable Building Tax Credit (homes must be certified sustainable by the U.S. Green Building Council in order to qualify for this).
Finally, the federal solar investment tax credit (ITC) is provided by the federal government and is available to all homeowners throughout New Mexico. It’s offered at 30% of your entire cost of going solar.
With the typical system in New Mexico totaling $18,760, the federal tax credit averages around $4,878. This amount is credited to your federal income taxes due for the year you install and commission your solar system.
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