New Mexico solar incentives, tax credits and rebates
Resources for going solar in 2023
New Mexico offers some great incentives to help residents save on going solar. After tax credits, the average system is $13,132 in New Mexico, which is cheaper than in many other states. The national average is $16,715.
Residents can get a 100% exemption from the gross receipts tax (similar to a sales tax in other states) on their solar equipment, including solar panels and solar water heaters. There’s also a tax break on property taxes for those adding solar improvements to their homes.
Key insights
- The average federal tax credit value is $5,628 in New Mexico.
- You also can take advantage of solar tax breaks, tax credits and loan programs in the state.
- New Mexico residents who switch to solar save an estimated $15,413 over 25 years.
Solar incentives in New Mexico
The federal solar investment tax credit (ITC) is the most significant way to reduce the cost of going solar in New Mexico. If you install a solar panel system by the end of 2032, you will receive a federal income tax credit worth 30% of your system's total cost.
The federal solar investment tax credit drops to 26% in 2033 and 22% in 2034.
For example, in New Mexico, the average system costs $18,760. With the ITC, you can get a $5,628 credit on a system of that cost when you file your taxes. You must claim your system for the same year it became active and submit Form 5695 to qualify. The credit is nonrefundable, which means any amount that exceeds your liability rolls over into the next tax year.
Residential solar incentives in New Mexico
When it comes to incentives, New Mexico is all about offering tax breaks and credits to those who go solar to make the transition more affordable. The state also offers an affordable solar loan program.
New Solar Market Development Tax Credit
The New Solar Market Development Tax Credit, which applies to state taxes, equals 10% of the purchase and installation costs for solar photovoltaic (PV) panels, solar water heaters, solar space heaters, solar thermal electrics and solar thermal process heating. In most cases, the maximum incentive amount is $6,000 per taxpayer per year.
The credit is set to expire on Dec. 31, 2032.
2021 Sustainable Building Tax Credit
The Sustainable Building Tax Credit applies to solar panels, solar water heating and solar space heating. The credit caps at $25,000 and can be applied to your income tax in that year (and the next three years as needed, depending on the amount of the credit). The credit expires on Jan. 1, 2028.
Property Tax Exemption for Residential Solar Systems
New Mexico’s solar property tax exemption subtracts the value added to your house after installing solar panels, a solar water heater or a solar space heater when calculating your home’s value for property tax purposes.
Solar Energy Gross Receipts Tax Deduction
The sales tax incentive is good for 100% of gross receipts from the sale and installation of solar energy systems. Eligible equipment includes solar panels, solar water heating, solar space heating and solar thermal electricity.
» MUST-KNOW: Tax deductions for homeowners
Renewable Energy Financing District/Solar Energy Improvement Special Assessments
You can get low-interest, fixed-rate loans for solar projects through the Property Assessed Clean Energy (PACE) financing program. Eligible technology includes solar panels, solar water heaters, solar space heaters, geothermal electric systems, solar thermal electric equipment and geothermal heat pumps. The loans are paid back through a fee added to your property taxes.
More solar incentives in New Mexico
| Incentive type | Incentive amount | Applicable sectors | Administrator | Available statewide | |
|---|---|---|---|---|---|
| Clean Energy Revenue Bond Program | Bond program | Varies | Schools, state government | New Mexico Finance Authority | |
| Alternative Energy Product Manufacturers Tax Credit | Industry recruitment/support | Varies | Commercial, industrial | New Mexico Energy, Minerals and Natural Resources Department | |
| Gross Receipts Tax Exemption for Sales of Wind and Solar Systems to Government Entities | Sales tax incentive | 100% of gross receipts | Construction, local government, state government, federal government, installers/contractors, retail supplier | New Mexico Taxation & Revenue Department | |
| Advanced Energy Gross Receipts Tax Deduction | Sales tax incentive | 100% of gross receipts | Commercial, construction, installers/contractors, retail supplier | Taxation and Revenue Department | |
| Drinking Water State Revolving Loan Fund | Loan program | Varies | Local government | New Mexico Finance Authority |
What to know about net metering in New Mexico
When you make more energy than your home can use (and you don’t store it in a solar battery), you can send it to the power grid and receive compensation. This is called net metering.
In New Mexico, electric utilities can decide how much they want to pay customers for the energy produced by residential solar. To qualify, you must apply for interconnection with your power company.
Benefits of net metering in New Mexico
Net metering in New Mexico offers significant benefits to solar energy producers and the environment.
- Accessible: Net metering is available to all qualifying facilities (QFs), making it accessible to residential and commercial users. There’s no statewide cap on the aggregate capacity of net-metered systems, so there’s ample room for growth.
- Financial incentive: For systems up to 10 kilowatts, you get credits or payments for excess energy production. These credits can be carried forward, reducing future energy bills or providing a source of income.
- Support for renewable energy: Net metering encourages the adoption of renewable energy sources like solar and wind, helping reduce greenhouse gas emissions and dependence on fossil fuels.
Potential drawbacks
New Mexico makes the net metering process a little tedious and doesn’t reward excess generation as much as some other states.
- Compensation varies: The compensation for net excess generation (NEG) varies depending on the utility, and for larger systems (more than 10 kW), it's based on time-of-use rates. This makes it difficult to predict your financial returns.
- Interconnection costs: If the net metering option requires costly equipment, the QF has to pay for it. This can especially discourage small-scale renewable energy producers from participating.
- Utility response time: The 60-day notice requirement for interconnection and the 15-day response window for utilities can lead to delays and uncertainties in the interconnection process.
Solar resources in New Mexico
Below are some additional resources to guide you through transitioning to solar in New Mexico.
- City of Albuquerque Solar Resources
- How to Go Solar in Las Cruces
- New Mexico Community Solar Program
- New Mexico Interconnection Manual
- New Mexico Office of Renewable Energy
- New Mexico Public Regulation Commission Community Solar Information
- New Mexico Solar Energy Association
- New Mexico Tax Credits Overview & Forms
- PNM Customer Solar Energy Program
- Santa Fe County Sustainability Office
- The New Mexico State Land Office (Commercial Resources)
» GUIDE: Solar panel installation
Find solar companies in New Mexico
Compare popular solar companies available in New Mexico below. Read our guide on the best solar companies for more.
| SunPower | Sunrun | ShopSolar | Sunnova | Green Home Systems | |||
|---|---|---|---|---|---|---|---|
| Primary |  | SunPower | Read reviews | Customer Rating 4.3 | Free quote | Payment options
Cash, loan, lease
| Warranty
25 years
|
| Primary |  | Sunrun | Read reviews | Customer Rating 4.1 | Free quote | Payment options
Cash, loan, lease, PPA
| Warranty
25 years
|
| Primary |  | ShopSolar | Read reviews | Customer Rating 4.7 | Free quote | Payment options
Cash, loan
| Warranty
Varies
|
| Primary |  | Sunnova | Read reviews | Customer Rating 1.1 | Free quote | Payment options
Cash, loan
| Warranty
25-year system warranty
|
| Primary |  | Green Home Systems | Read reviews | Customer Rating 3.7 | Free quote | Payment options
Cash, loan
| Warranty
Varies by system
|
FAQ
Can I get solar panels for free in New Mexico?
There are no free solar programs in New Mexico. You can lease your equipment or enter a power purchase agreement (PPA) with little to no upfront costs, though.
» FREE SOLAR PANELS: Are they really free?
How much can I save with solar panels in New Mexico?
In New Mexico, the average savings for residents who install solar panels is $15,413 over 25 years. So, even if you don’t generate 100% of your energy needs, you can still save a lot of money compared with paying traditional utility bills.
Are there any commercial solar incentives in New Mexico?
There are loan and bond programs as well as many tax exemptions that businesses going solar can take advantage of in the Land of Enchantment.
» MORE: Commercial solar panels
Are there any disadvantages to going solar in New Mexico?
The biggest disadvantage of going solar in New Mexico is it lacks rebates other states have for equipment. It can also be more difficult to sell a house with solar panels, according to Mary in Albuquerque.
“In New Mexico, they're not big solar people,” Mary told us. “So, it was very hard to get any buyers to understand the value of it. … If anything, it was a negative for potential buyers.”
Is my HOA allowed to restrict solar panels?
The New Mexico Solar Rights Act and the New Mexico Solar Recordation Act state that homeowners associations (HOAs) can not legally restrict the installation of solar panels.
» GREENEST STATES: New Mexico ranks No. 32
How can I pay for solar panels?
You can pay upfront, but most people finance solar panels through a solar loan. Since you pay it back over time with interest, it will cost more than paying upfront. You can also consider a lease or PPA (power purchase agreement).
» SOLAR PANELS: Lease vs. buy
Bottom line: How much are solar panels in New Mexico?
The state of New Mexico makes switching to solar easy. On top of net metering options, there are tax breaks and credits to make solar more affordable. You can also take advantage of a low-interest, fixed-rate loan if you can’t pay out of pocket.
It’s around $3,000 cheaper to go solar than in other states after the ITC. Plus, the state has great tax incentives and an affordable loan program to make adding solar to your power a big money saver.
The ConsumerAffairs Research Team conducted an in-depth analysis to determine how much it costs to go solar in New Mexico and the average solar costs in other states.
Solar costs: New Mexico vs. nearby states
| Upfront cost* | ITC value (30%) | Typical system size | Average cost per watt | Payback period** | Estimated net savings | |
|---|---|---|---|---|---|---|
| New Mexico | $18,760 | $5,628 | 7 kW | $2.68 | 12 years | $15,413 |
| Arizona | $30,015 | $9,004 | 11.5 kW | $2.61 | 12 years | $23,891 |
| Utah | $21,440 | $6,432 | 8 kW | $2.68 | 14 years | $10,202 |
| Colorado | $20,176 | $6,053 | 7.5 kW | $2.69 | 12 years | $14,479 |
| Texas | $30,934 | $9,280 | 8.5 kW | $2.69 | 13 years | $21,350 |
| Oklahoma | $28,820 | $8,646 | 11 kW | $2.62 | 14 years | $14,190 |
Article sources
- DSIRE, “ New Mexico Programs .” Accessed Sept. 19, 2023.
- DSIRE, “ Net Metering in New Mexico .” Accessed Sept. 19, 2023.
- EcoWatch, “ Solar Panel Cost in New Mexico .” Accessed Sept. 19, 2023.
- United States Environmental Protection Agency, “ Summary of Inflation Reduction Act provisions related to renewable energy .” Accessed Sept. 19, 2023.
- Solar Energy Industries Association, “ New Mexico Solar .” Accessed Sept. 19, 2023.
- New Mexico Energy, Minerals and Natural Resources Department, “ Solar Market Development Tax Credit (SMDTC) .” Accessed Sept. 19, 2023.
- New Mexico Energy, Minerals and Natural Resources Department, “ Sustainable Building Tax Credit (SBTC) .” Accessed Sept. 19, 2023.
- New Mexico Energy, Minerals and Natural Resources Department, “ The Energy Conservation and Management Division (ECMD) provides technical review and certification of tax credits for several tax credit programs. ” Accessed Sept. 19, 2023.
- New Mexico Compilation Commission, “ ARTICLE 3 Solar Rights .” Accessed Sept. 19, 2023.
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