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.
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 up to $2,000 for a heat pump. Four-person households above $60,000 would qualify for up to a $1,000 credit.
The Sustainable Building Tax Credit passed in 2021 is refundable for qualifying low-income residents and non-refundable for everyone else. Say you spend $8,000 on a heat pump. Make sure you apply for and obtain a “2021 Sustainable Building Tax Credit” certificate from EMNRD in the year you install the heat pump.
- If you qualify as LOW-INCOME (<200% of the Federal poverty level) you will get up to $2,000 back from the state even if you owe no state taxes. Instructions from NM Taxation and Revenue: If you are a low-income taxpayer, the excess shall be refunded to you if requested on the Schedule CR. Your eligibility will be determined by EMRND and will be specified on your Certificate of Eligibility from EMRND. To obtain the Certificate of Eligibility from EMNRD call (505) 476- 3372, email emnrd.taxcredits@state.nm.us, or visit www.emnrd. nm.gov.
- For HIGHER INCOMES above 200% of Federal poverty levels, you can only get back what you owe in taxes up to $1,000, but this can be carried over a 7 year period. So for example, say you spent $8,000 on a heat pump in 2023, and you owe $600 in taxes in 2023 after filing your certificate. You would get back $600 in 2023. In 2024 you could carry over the remaining $400, so if you again owe $600 in 2024 you would receive a $400 refund.
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. 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 annual allotment was just raised to $30 million from $12 million, thanks to SB 121. 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 $3,080.
IF YOUR APPLICATION WAS REJECTED in 2020-2023 because the annual cap had been reached, you will be able to apply for the credit again in 2024. Check back at this website by June 2024.
How can you benefit?
- Lower energy bills. The estimated average annual energy cost savings for a New Mexico taxpayer is $1,616 (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.