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Residential solar energy in New Mexico, benefits significantly from a variety of federal and state incentives designed to encourage the adoption of solar power. These incentives make solar installations more affordable and attractive to residential customers, contributing to energy savings and sustainability.
The most prominent federal incentive for solar energy is the Investment Tax Credit (ITC), also known asthe federal solar tax credit. This credit allows you to deduct 30% of the cost of installing a solar energy system from your federal taxes. This substantial benefit is available for systems installed through 2032. After this period, the credit value will begin to decrease: 26% in 2033, 22% in 2034, and expiring there after for residential systems.
The ITC applies to both the cost of the solar panels and the installation costs, but it does not coverany structural changes solely for supporting the panels. Importantly, the solar ITC is a nonrefundable tax credit, which means it can only reduce your tax liability to zero and cannot result in a tax refund. However, any excess credit can be carried forward to the next tax year.
Additionally, under certain conditions, solar energy storage systems are also eligible for the ITC, provided they have a capacity of 3 kilowatt hours or more. This inclusion encourages the integration of batteries with solar systems, enhancing the utility and efficiency of solar installations.
In New Mexico, residents can take advantage of specific state-level incentives alongside the federal ITC. These may include tax credits and rebate programs designed to reduce the upfront costs of solar energy systems. For instance, some local utilities offer rebates for solar installations, and there are also property tax exemptions for added home value due to solar system installations.
Net metering is another significant incentive in New Mexico, allowing solar panel owners to receive credits on their utility bills for excess energy produced by their systems. This energy is sent back to the grid and can offset the cost of power drawn from the utility during times when the solar system isn't producing energy, such as at night.
Furthermore, the state offers favorable policies for the sale of Solar Renewable Energy Credits (SRECs). These credits can be sold on the market, providing additional income for solar system owners. The value of SRECs varies, influenced by local market conditions and utility company demand .
The combination of federal and state incentives makes investing in a solar energy system increasingly economical and sustainable. These incentives not only lower the initial investment cost but also improve the return on investment over the lifespan of the system. For homeowners in New Mexico, taking the time to understand and utilize these incentives can significantly offset the costs of solar installation, contributing to long-term savings and environmental benefits.
For more detailed information on specific programs and eligibility, potential solar system buyers can consult with Number One Plumbing, AC, Solar & Electrics solar experts who are familiar with the latest in solar incentive programs.
Disclaimer: This guide provides an overview of the federal investment tax credit for residential solar photovoltaics (PV) and NM Solar Market Development Tax Credit. For additional information see the Homeowner’s Guide to the Federal Tax Credit for SolarPhotovoltaic (See the Federal Solar Tax Credits for Businesses for information for businesses), and NM Solar Market Development Tax Credit for NM state information. This does not constitute professional tax advice or other professional financial guidance and may change based on additional guidance from the Treasury Department and the New Mexico Taxation and Revenue Department.
