New Mexico solar rebates and incentives: 2024 guide

The average New Mexico solar shopper will save $4,673 on solar panels with rebates and incentives.

Updated May 7, 2024

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    Written by: Casey McDevitt

    Solar panel systems in New Mexico are expensive, but incentives from the state and federal governments can help you reduce the upfront cost. Between the federal tax credit and other state-specific incentives, you can save thousands on solar panels, making them well worth the investment. Here's how you can lower the cost of solar if you live in New Mexico.

    See how much solar costs in New Mexico

    As a New Mexico homeowner, you have access to some great incentives that can substantially improve your return on investing in solar panels. The tax credits below are some of the most impactful ways to bring down your solar costs.

    Incentive
    Average savings in New Mexico
    Description

    Residential Clean Energy Tax Credit, formerly the federal investment tax credit (ITC)

    $4,673

    Lowers your solar panel system's cost by 30%

    New Solar Market Development Tax Credit

    Up to $6,000

    Lowers your solar panel system’s cost by 10%, up to $6,000

    Sustainable Building Tax Credit (SBTC)

    Varies based on square footage and the level of certification achieved

    Tax credit earned for sustainable building efforts

    Residential Clean Energy Credit

    The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax. 

    The average cost for a 5 kW solar panel system is around $15,578 in New Mexico. Once you factor in the 30% credit, the cost comes down to $10,905.

    When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible. 

    You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization.

    Solar Market Development Tax Credit

    The Solar Market Development Tax Credit (SMDTC) allows solar owners to earn a tax credit equal to 10% of the costs of equipment, materials, and labor for a solar energy system, up to $6,000. Solar energy systems must be certified by the New Mexico Energy, Minerals, and Natural Resources Department (EMNRD) to be eligible for this tax credit. 

    This program’s funding is capped at $12,000,000, meaning that once the state awards $12,000,000 in tax credits, no more applications will be accepted that year. However, House Bill 252 raises the annual aggregate cap to $30,000 and is expected to go into effect in 2024. 

    Sustainable Building Tax Credit (SBTC)

    The Sustainable Building Tax Credit (SBTC) enables you to earn credit 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. 

    Solar panel systems used to claim the Solar Market Development Tax Credit cannot be used to claim the SBTC.

    In addition to the great rebates and incentives above, New Mexico also offers tax exemptions for solar panel systems. The solar property tax exemption means you don't need to pay a higher property tax for adding solar panels to your house.

    Tax Exemption
    Description
    New Mexico solar property tax exemptionIf you use solar energy as a source of power, you won't need to pay more for the value your solar panels add to your property.

    If you connect your solar panel system to the grid, you can benefit from net metering, one of the best solar panel incentives available in New Mexico. With net metering, you earn credits when you send excess electricity from your solar panels to the grid. When the sun isn't shining and you need to pull electricity from the grid, your utility will apply the credits to your bill. Net metering makes it so you will owe very little, or even nothing, on your electric bills with solar panels. 

    Municipal utilities in New Mexico aren’t required to offer net metering, but regulated electric companies must support net metering for solar panel systems under 10 kW. Under New Mexico’s net metering program, you’ll earn credits at the retail rate of electricity for each kWh of electricity your system produces up to 100% of your utility electricity demand. If you send more electricity to the grid than you demand, you’ll be credited at the avoided cost rate for your excess generation.

    Learn more about these net metering programs:

    Xcel Energy PNM Resources El Paso Electric Company

    New Mexico doesn't offer any state-specific battery incentives. However, all batteries above 3 kWh in size are eligible for the 30% federal tax credit. In New Mexico, batteries can also boost energy independence and provide backup power during an outage.

    Learn more about battery incentives and rebates

    If you're looking for solar installers in New Mexico, here are some popular suggestions:

    See the complete list of solar companies in New Mexico

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