The New Mexico state government offers three financial incentives for taxpayers who convert to solar:
- Solar Market Development Tax Credit (SMDTC)
- Sustainable Building Tax Credit (SBTC)
- Property tax exemption
As of 2023, New Mexico doesn’t offer solar rebates or sales tax exemptions. However, the tax incentives alone can save you hundreds of dollars.
Solar Market Development Tax Credit (SMDTC)
Incentive Value: 10% of solar system costs up to $6,000
Frequency: Single-use
The New Mexico solar tax credit is the Solar Market Development Tax Credit (SMDTC) and is managed by the Natural Resources Department. It works this way:
- After installing solar panels or a thermal solar system, you can claim 10% of project costs as a state tax deduction, up to a maximum amount of $6,000.
- This incentive is available for residential, commercial, industrial and agricultural solar installations.
The New Mexico solar tax credit is available through 2032, but the annual budget is limited to $12 million. This means you have a higher chance of getting the incentive if you submit the application early in the calendar year. The tax credit was awarded to 3,785 solar installations in 2022, and the average incentive was $3,055 per project.
To give you an idea of how this saves you money, let’s say you install a 6-kW home solar system in New Mexico for $14,280. The 10% state credit is $1,428. Add in the 30% federal tax credit of $4,284, the total incentive is $5,712. In other words, you recover 40% of your solar power investment in less than a year.
Sustainable Building Tax Credit (SBTC)
Incentive Value: Up to $6.50 per square foot for sustainable design
Frequency: Single-use
The New Mexico Sustainable Building Tax Credit (SBTC) is divided into two sets of incentives:
- Tax credits for energy efficiency in existing homes
- Tax credits for sustainable new residential construction and commercial renovation
Unfortunately, solar panels aren’t included in the list of eligible products for existing homes. However, the tax credit is available for electric vehicle chargers and ENERGY STAR heat pumps, which can use the electricity generated by solar panels. In the case of new construction, the SBTC is available for homes that meet any of the four following requirements:
Solar panels can help you qualify for either certification by reducing the Home Energy Rating System Index of your new home. However, you can’t qualify with solar panels alone because both certification systems cover multiple areas of home performance.
The SBTC has a budget of $7.15 million. It’s not a solar-only incentive, but solar panels help you qualify when you combine them with other energy conservation measures.
Property Tax Exemption for Residential Solar Systems
Incentive Value: Varies depending on local property taxes
Frequency: Continuous
New Mexico enacted a property tax exemption for residential solar systems in 2010, which means you don’t get taxed for the increase in home value after going solar. If you own a home with a $300,000 assessed value and a solar panel installation increases its value to $320,000, your property taxes will still be calculated for a home value of $300,000.
This post was originally published on 3rd party site mentioned in the title of this site
