Solar Tax Credit

Solar Tax Credit New Mexico

The benefits of solar energy are numerous, but their initial cost may seem high. Many states have tax rebates or incentives that can lower the cost of residential solar. New Mexico residents have a few different options to choose from in addition to federal incentives. Below are the most popular incentives offered to New Mexico residents. Please keep in mind that these credits may change over time, so for the most up-to-date solar tax credit New Mexico information, please visit the official links for each tax credit.

Solar Market Development Tax Credit (SMDTC)

This tax credit was passed in 2020 to provide a 10% tax credit and up to $6,000 in savings when installing a solar system. However, the tax credit has a cap of $30M for the state, so it is distributed on a first come first served basis. If you are interested in solar, schedule your project now to save money. 

Sustainable Building Tax Credit (SBTC)

Solar panels are not included in this tax credit, but other energy batteries or EV chargers that utilize solar energy can be covered. New Mexico is rewarding any sustainable building design in the state. Whether you are building a new home or are upgrading your home to more energy-efficient options, the Sustainable Building Tax Credit will apply. 

Property tax exemption

Solar panels add to the value of your home, which allows for more marketability, which is not able to be taxed. Homes with solar are exempt from property tax in New Mexico because this makes it a more feasible option for residents to install. The financial benefits of generating your own power will be even more appealing when it doesn’t come with a high tax bill!

Net metering

Another solar tax credit in New Mexico is the Net Metering policy for renewable energy. All regulated utility companies will give you a credit when you have extra solar energy sent to the grid. The credit will be calculated at the same energy price they charge you for your monthly bills.

If you are generating a large amount of solar energy, net metering helps you have extra electricity when your system isn’t producing enough. These credits can roll over each month, so you can essentially save them for a rainy day. 

Inflation Reduction Act

The federal government passed the Inflation Reduction Act which now helps solar projects qualify for a 30% tax credit. The amount can change based on the cost of your system, and the access to materials and permits you need to obtain. If you purchase a system or finance it, the federal tax credit will go directly through your yearly tax return. The average savings from this inflation tax credit is $9,000.