What’s the difference between a tax credit and a rebate?

A tax credit is a reduction in the amount of taxes you owe.

• • In most cases you must obtain a certificate or other paperwork at the time of the install, and then you obtain the tax credit when you file your taxes.  For example, if you install solar you would follow the directions on this page to obtain a certificate that you would use to apply for the state solar tax credit.  Ask your solar company for paperwork need for the federal tax credit.
  • Federal, and probably soon the state as well, clean car tax credits can be transferred to the dealer at the time of sale for the maximum amount even if you will not owe any taxes.
  • Most of the state tax credits are refundable at least at some income levels, meaning you do not have to owe any taxes to receive them as a refund when you file your taxes.
  • Most of the federal tax credits are nonrefundable, meaning you have to owe some taxes and the credit is only as big as your tax liability.

A rebate is a discount or coupon that reduces the cost of an item before, during and after it is purchased.

Stacking incentives.  You can combine all these incentives with the prevision that in calculating federal tax credits (e.g., 30% of the cost for solar) you must subtract rebates you received from the initial cost.

Do YOU qualify for incentives?

Eligibility for different programs can depend on your income and other factors such as where you live; household size; health status; if you are a homeowner, landlord or renter; and whether you pay taxes or not.  People enrolled in Disability Income, Supplemental Security Income (SSI) and similar programs automatically qualify for some rebates and free retrofits. one group of  PNM rebates are only for customers who have used their Check-Up program. Some Coop rebates are only available for customers who contact the Coop first.  . Low-income can be defined differently in different programs. Some essentials:

• • To see what New Mexico State incentive programs you qualify for, click here.  These include:
    • Clean Car Tax Credit for EVs and EVs chargers, available even if you do not owe State Taxes (refundable credits). We expect that the NM Clean Cars tax credit will be available as an immediate discount at the dealership if the 2025 Legislature passes a bill.
    • The Inflation Reduction Act Rebate programs for Low-Income residents (Income < 80% Area Median Income or who participate in these programs)
    • Sustainable Building Tax Credit  is available to all incomes. If you do not owe State Taxes you can receive this credit provided your income is less than 200% of the Federal Poverty Level, which updates every year.
    • Solar Market Development Tax Credit
    • State agency Housing NM has no-cost retrofit programs for Low-Income residents on its waiting list. It gives priority to households with persons over 60 years of age, families with children and homes that use a lot of energy.
  • Most Federal tax credits are available only if you pay federal taxes (nonrefundable credits), although some credits may be carried over several years if it doesn’t cover your costs the first year.
    • One exception is the credit for Clean Cars. You can get the maximum tax credit amount even if you do not pay federal taxes if you transfer your credit to the dealer at the time of purchase. 
    • Federal tax credits for electric chargers are only available for people who live in certain low-income or non-rural census tracks.
  • Municipalities and Counties may implement Low-Income programs such as the Community Energy Efficiency Development (CEED) and Solar of All grants.
  • Many Utility and Rural Electric Coop customers are offered rebates on a wide range of products and services as well as special electricity rates for charging EVs. Your electricity provider may have special programs or higher rebates if you are a low-income customer. For example, PNM’s Low-Income program is for residents with incomes less than 200% of the Federal Poverty Level. Some Coops will be introducing on-bill financing in 2025, and credit unions have green energy loans with lower rates for low-income and underserved communities.
  • Check out our Resources for Low-Income Residents

Below are some of the available incentive programs. It is not an inclusive list and more programs may be coming!

Does your EQUIPMENT qualify for tax credits and rebates?

We are not tax or legal professionals so please do your own due diligence. 

Not every electric vehicle or honeycomb window blinds automatically qualifies for a tax credit or rebate.  Check with the party issuing the incentive to see if they have a list of acceptable models, retail stores and/or installers. For example, the  New Mexico IRA rebates for DIY insulation webpage lists participating retailers and qualifying products.  Some utilities will only allow specific EV chargers or have a list of  contractors you have to use for energy services to obtain a rebate. PNM has two rebate programs – one that requires you to schedule a PNM Check-up first and the other is for a list of contractors in their Midstream Program. Different programs may also have different technical requirements for what qualifies. Don’t assume just because a model is Energy Star that it will qualify for one particular program.

Some equipment like heat pumps must meet minimum technical standards that change every year. Your installer should check that the heat pump is eligible and give you an AHRI certificate to that effect.  In theory, New Mexico does not give tax credits for heat pumps installed with a gas furnace (dual fuel systems).  Not all gas furnaces that qualify for NM Gas rebates also qualify for federal tax credits.

For more information on the different technical requirements for energy efficient equipment in different programs click here.