Sustainable Building Tax Credits Solar Market Development Tax Credit
This is a list of New Mexico’s present and past Conservation & Preservation Tax Credits. The two programs below are the primary credits related to home electrification.
Sustainable Building Tax Credit (SBTC)
As shown in the table below, these credits are for doors, window, air- and ground-sourced heat pumps, heat pump water heaters, insulation improvements and EV charger installation. This article is helpful.
There are three ways to benefit from the New Mexico Sustainable Building Tax Credit Program:
- By installing energy-conserving products in an existing residential or
commercial building. - Constructing a new residential or commercial building in a manner that qualifies for Build Green New Mexico or LEED (Leadership in Energy and Environmental Design) certification.
- Renovating a commercial building in a way that reduces total energy and power costs by fifty percent.
These credits are available to individual homeowner and business taxpayers (including landlords). You must apply for a certificate from Energy, Minerals and Natural Resources signifying that you qualify for a tax credit, which you then file with your taxes. There are annual caps on the amounts available each year, and the credits are given out on a first-come, first serve basis, so apply for your certificate as soon as your project is complete, and the earlier in the year the better. Don’t wait until tax time the following year! For installing energy conserving products use these instructions and apply in this portal. (These credits went into effect on January 1, 2021; New construction and commercial renovation went into effect on January 1, 2022. )
Higher credits are given to Low Income residents or installations made in affordable housing. Low Income is defined as having income below 200% of the Federal Poverty Line for each year and depends on household size. For example in 2023, the Federal poverty line for a household of 4 is $30,000. So a 4-person family with an adjusted gross income below $60,000 would qualify for the low-income SBTC tax credit of $2,000 for a heat pump. Four-person households above $60,000 would qualify for a $1,000 credit.
More extensive details and an application portal for new construction and commercial renovation can be found on the Energy, Minerals and Natural Resources website.
Solar Market Development Tax Credit (SMDTC)
This tax credit is available to businesses and homeowners for solar equipment and installation. Solar systems installed on or after March 1, 2020 are eligible for a tax credit of up to 10%, capping at $6,000. The credit will expire in eight years so this is a great opportunity to lower energy bills, protect the environment, increase the value of your home, and save money at tax time!
The solar tax credit has an annual allotment of $12 million, and applications are first come first served. Over 9,000 projects have been approved since the credit was implemented in 2020, with an average approved credit amount of $3,051.
What to know:
1) The SMDTC must be applied for using the application form on the EMNRD website.
2)Applications are first come, first served, and once the annual funding cap of $12 million is reached, no more certificates will be issued that year. So apply for the credit as soon as your project is done.
3) It provides a tax credit of up to 10% with a savings value of up to $6,000.
How can you benefit?
- Lower energy bills. The estimated average annual energy cost savings for a New Mexico taxpayer is $1,660 (based on a statewide average of $0.12 per kWh).
- Increase home value. According to a large scale study by the Department of Energy’s Lawrence Berkley Laboratory, home buyers are consistently willing to pay more for homes with solar energy systems. Despite increased home value, New Mexico does not add this value to your property taxes.