New Mexico Solar Incentives, Tax Credits & Rebates (2024 Guide)
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Going solar costs less in New Mexico than in other states, but that’s not the only reason to transition to clean energy. The state also has several solar incentives to help homeowners save money on a new solar panel system.
We’ve spent hundreds of hours researching the best solar companies and each state’s credits and rebates to compile this list of solar incentives in New Mexico. Read on to learn how you can cut costs on your solar project.
What Are the New Mexico Solar Tax Credits and Rebates?
New Mexico residents benefit from local, state, and federal solar incentives. Here are the state’s top solar programs:
Property Tax Exemption
Installing solar panels can increase your home value by as much as $15,000. Higher home value usually means your property taxes go up, but New Mexico has a property tax exemption that prevents this.
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Sales Tax Exemption
New Mexico doesn’t add sales tax to solar equipment. The state’s sales tax is set at 5%, so that’s several hundred dollars or more you won’t have to pay on your solar power system.
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State Solar Tax Credit
The New Mexico state tax credit, known as the New Solar Market Development Tax Credit (NSMDTC), is one of the biggest ways you can save. Those who install a residential, commercial, or agricultural solar system can claim the credit to reduce their state tax payment the year of installation by $6,000 or 10% of the total solar expense, whichever is lower. The average solar panel system cost in New Mexico is $19,680* for a 6-kilowatt (kW) system, so that’s over $1,900 homeowners can save.
*Price according to EnergySage.
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Most states have sustainable energy goals to switch to low-impact, energy-efficient practices. New Mexico’s state government offers a tax credit if you build your home using sustainable efforts, such as installing solar energy. Your home needs to be certified sustainable by the U.S. Green Building Council to qualify. Your certification level determines the credit’s value. You could earn as much as $6.50 per square foot of property.
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How Does the Federal Solar Tax Credit Work?
The federal investment tax credit (ITC) allows you to claim a percentage of your solar panel installation’s costs on your federal taxes. This is the largest solar incentive offered. All you need to do is let your accountant know when you file your federal taxes the year you install solar panels. The current tax credit will remain at 30% until 2033. That means you can claim 30% of your total solar system costs to reduce or eliminate your owed taxes.
This credit is only available to those who own their system, meaning people who buy it up-front or take out a solar loan. Those with a solar lease or power purchase agreement (PPA) aren’t eligible. Learn more about the federal solar tax credit in our guide.
Is Net Metering Available in New Mexico?
Net metering programs allow solar panel system owners to sell excess energy to their electric company for utility bill credits. You can use those credits to pay future electric bills if your system doesn’t produce enough energy to power your home and you need energy from the grid. PNM and Xcel Energy are two New Mexico utility companies offering net metering programs.
How Much Do Solar Panels Cost in New Mexico?
The average solar panel cost in New Mexico is $3.28 per watt. That’s roughly $19,680 for a 6-kW system, according to EnergySage. This is slightly below the national average cost of $20,650. This price is before applying any solar incentives. The federal tax credit can lower your system cost by $5,904, for a total of $13,776.
Is Going Solar in New Mexico Worth It?
Going solar is worth it in New Mexico because of its many incentive programs. Most solar owners break even on their solar panel system investment in eight to nine years. Once you pay off your system, you can enjoy electric bill savings and clean energy for the panels’ lifetime, which is roughly 30–35 years.
However, several factors can impact how much you’ll save by going solar, such as your roof’s orientation and your average energy usage. You can review your monthly electricity bill to see how much energy you use to power your home. If you have a particularly small home that doesn’t use much energy, investing in a system may not make financial sense.
Our Conclusion
Not all states have as many solar incentives as New Mexico, so take advantage of them if you’re considering going solar. If you’re ready to talk to a solar company about your options, you can start by getting a quote on each company’s website or by entering your ZIP code below to see what solar prices are like in your area.
FAQ About Solar Tax Incentives in New Mexico
Does New Mexico have a solar tax credit?
Yes. Those who install a residential, commercial, or agricultural solar energy system can claim the solar tax credit to reduce their state tax payment the year of installation by $6,000 or 10% of the total solar expense, whichever is lower.
How do I claim the New Mexico solar tax credit?
You’ll need to obtain the required documents from your solar installer and apply for the credit with the Energy, Minerals and Natural Resources Department. Once you receive your certificate of eligibility from the department, you can claim your tax credit with the New Mexico Taxation and Revenue Department. Your tax preparer can provide the appropriate tax form.
Can I get free solar in New Mexico?
No, you can’t get free solar panels in Mexico, but multiple solar rebates and tax credits can save you thousands of dollars on a system. New Mexico residents can take advantage of the state solar tax credit, federal solar tax credit, sustainable building credit, and net metering.
What are the best solar incentives in New Mexico?
The state solar tax credit and federal income tax credit are the most rewarding New Mexico solar incentives. The state credit reduces your total solar expense by $6,000 or 10%, whichever is lower. The federal solar tax credit lowers your cost by 30%.
Our Rating Methodology
We are committed to providing comprehensive and unbiased reviews to our readers. After over a thousand hours of research on solar companies, interviews with experts, and common customer needs, we’ve created a detailed rating system for solar providers based on six factors:
- Solar equipment, installation, and services (25%)
- Warranty and performance guarantees (25%)
- Brand reputation and certifications (15%)
- Financing options (15%)
- Experience (10%)
- Availability (10%)
Total scores are divided by 20 for a final 5-point rating scale.
To share feedback or ask a question about this article, send a note to our Reviews team at reviews@thisoldhousereviews.com.
