What To Know Before You Start: Incentives

The Inflation Reduction Act (IRA), New Mexico state and electricity providers offer consumers financial incentives to lower their energy bills with more efficient appliances and weatherization, access renewable energy and improve their indoor air quality.   Incentives come in the form of tax credits and rebates that can be stacked or combined for greater savings with some caveats.

• Eligibility for different programs depends on your household income, household size and location.  For example, to qualify for the IRA Home Energy Rebates which will begin in New Mexico on Sept. 2, 2024, only households with income less than 80% of the Area Median Income (AMI) qualify. Sign up for updates on the IRA Rebates here
• Federal tax credits are nonrefundable meaning that if you don’t pay federal tax, you are not eligible for the credit. If you owe $1000, then any tax credit you apply for is capped at that amount.
  • An exception is the EV tax credit. You can transfer your EV credit to participating dealers for an instant discount in the amount of  the maximum allowable tax credit.
  • In figuring out a federal tax credit you must subtract any rebates from utilities and manufacturers from the cost before figuring your tax credit. You do not have to subtract any state incentives.
• Most of the New Mexico tax credits are refundable, meaning you will get the tax credit amount whether you pay taxes or not. The Sustainable Building Tax Credit is only refundable if your income is < 200% of the Federal Poverty Guideline.   We expect that the NM Clean Cars tax credit will also be available at as an immediate discount at the dealership next year after the Legislature meets.

Below are some of the availble incentive programs. It is not an inclusive list and more programs may be coming! Several low-interest loan and utility on-bill financing programs are in the works in addition to exisitng green loan programs at several credit unions, with special rates for low-income and underserved communities.

NM was the first state to apply for the IRA Home Energy Rebates, and will be the third state to implement them. Stay up to date with the IRA rebates and other state tax credits by signing for the newsletter at this website: https://clean.energy.nm.gov/

Great intro to Making Your Electric Plan from Electrify Now. Also try Rewiring America’s new Electrification Planner for incentives (with the caveat that IRA rebates in New Mexico will be limited to low-income and multi-family units.

Here are some things to keep in mind:

Get an energy audit and insulate/fix leaks first.  It will save you money on heat pumps and could avoid an expensive electric panel upgrade.

Heat pump installations can be pricey.

Make sure the model of the equipment you choose qualifies for incentives.

Federal Electric Vehicle tax credits are now transferrable to dealerships for the maximum allowable amount, giving you an instant discount. However not all dealers are participating. So check before you buy. Read more here.

Start planning now before an emergency like a busted water heater commits you to a choice you regret.  

Understanding Incentives. There are two ways to save: rebates discount the price of products and tax credits lower your tax bill.  If you plan to make the most of these, they will influence what you electrify and when. You can also finance energy and efficiency home improvements through FHA, VA and other energy efficient mortgages and loans.

Utilities and Rural Electric Coops offer rebates now. There are also free programs for low-income New Mexico residents to increase the energy efficiency of their homes.
***Bigger rebates from an IRA program for low-income residents (up to $14,000 per household for appliances) are coming in late 2024.  NM Energy, Minerals and Natural Resources Department has applied for the rebate programs and is working out how the program will be implemented through contractors and point-of-sale transactions.  Check on New Mexico’s application progress here. This calculator (Español) can tell you if you might qualify and for how much.  This Electrification Planner will help people at all income levels get started. The IRA rebates in New Mexico will only be for low-income and multi-family buildings. 
Contractors will also be eligible for rebates through the IRA and HOMES Rebate programs.

Understanding your home’s electrical system. Adding more electric appliances may require upgrading your electric panel, or breaker box, to accommodate more current, especially if you live in a house built before 2000 or have a panel that supports less than 100 Amps.  Some appliances may also require upgrading wiring for 240 volt outlets. Anticipating these and upgrading your electrical panel and wiring only once will save money in electrician visits (see how these upgrades are planned early in this electrification schedule for example). However, there may be ways to avoid these upgrades, which can run into the thousands of dollars.