How to Save Money on Solar Panels In New Mexico

Solar panels on the background of the image of the flag of State of New Mexico

How to Save Money on Solar Panels In New Mexico

This year, New Mexico took a giant step toward supporting solar energy with its new community solar program. This allows low and medium-income households to participate in lower utility bills and better carbon footprints. With this incentive at the forefront of the state’s list of benefits, it’s no wonder homeowners are choosing to switch to solar panels in New Mexico.

You might be asking, “Does the Land of Enchantment support renewable energy that well?” In this article, we break down New Mexico’s long list of solar incentives. From state tax credits to one of the most aggressive renewable standards in the country, there’s plenty of opportunity to save money. So let’s dive into New Mexico’s solar programs.

How to Save Money on Solar Panels in New Mexico: Overview

In New Mexico, homeowners have access to some of the most affordable equipment rates as well as the best sunlight in the country. This makes purchasing solar panels an affordable decision that could result in thousands of dollars saved on utility bills. 

These benefits don’t end here, however. The Land of Enchantment is home to some of the best state-level support for renewable energy. This means homeowners can apply for financial incentives and government programs to save even more on solar panels in New Mexico. Let’s take a look at the available incentives.

Solar Panels in New Mexico: Federal Incentive

Before New Mexicans look for state assistance, they should consider utilizing the federal solar tax credit. This program offers a 30% return on all purchases made toward an array, including labor, equipment, and sales taxes. Homeowners in New Mexico that apply for this credit can cut the cost of a 6kW system by nearly $4,500.

However, there are a few stipulations regarding this federal program. First and foremost, homeowners need to purchase their system outright. Additionally, they must use new equipment in their array and live at the home where it’s installed.

New Mexicans can take advantage of the federal tax credit until 2033, when it begins to taper off. The program drops to 26% that year and 22% the following year. The federal incentive ends in 2035 unless it’s extended.

Solar panel installation on a flat New Mexico roof, in horizontal format
Homeowners that apply for the federal tax credit can save 30% on installation costs for solar panels in New Mexico.

©PTZ Pictures/Shutterstock.com

New Mexico’s State Credits and Rebates

After lowering the cost of their panels with federal credit, New Mexicans can look to state-level financial incentives. Most notably, the Land of Enchantment offers a 10% state tax credit on all solar purchases for up to $6,000 off. For a 6kW system, homeowners can expect to receive about $1,800 in addition to the $4,500 from the federal credit.

Additionally, New Mexicans can continue to receive money back after the installation with the state’s net metering mandate. This program requires municipalities to pay customers for any excess energy produced from solar panels. These come in the form of a credit for next month’s utility bill, which rolls over indefinitely.

Net metering isn’t the only way that New Mexicans can earn money for their solar energy. The state has a performance program that allows homeowners to sell solar renewable energy credits (SRECs) for about $2.5 per megawatt. While this pales in comparison to other state performance programs, no one can complain about a little extra money.

Solar Panels in New Mexico: Government Regulations

Alongside financial incentives, New Mexico also offers solar incentives in the form of state-level regulations. For anyone that purchases a solar array, there’s an existing property tax exemption. This means that you’ll forego any additional tax increases for the increased value of your home.

All of these incentives and regulations stem from an aggressive set of renewable portfolio standards (RPS). An RPS is a set of internal goals that a state has for the future of renewable energy sources. These help us determine if the state has an interest in investing in solar.

New Mexico is one of five states with a 100% renewable goal. However, the Land of Enchantment aims to achieve this by 2045, which is sooner than most. Because of this, we can expect homeowners to have access to solar incentives for years to come.

Should New Mexicans Lease Solar?

In some states, homeowners can lease solar panels as an affordable way to reduce carbon footprints. While it disqualifies you from taking advantage of many incentives, including the federal solar tax return, it’s a fine option for those without the funds to purchase a system outright. 

Fortunately, New Mexico allows for solar leasing, allowing low and medium-income residents to participate in renewable energy.

However, if you don’t want to deal with lease payments, and your roof is not suitable for an array, New Mexico also has a new community solar program. Going public in May 2023, homeowners can sign up for a membership to a solar garden, giving them access to clean energy at a discounted rate.

Solar Panels in New Mexico: Incentive Summary

Federal Tax Incentive30% credit
New Mexico Tax Credits / Rebates10% off up to $6,000 / none
Net MeteringCredits at a retail rate that roll over indefinitely
Renewable Portfolio Standard50% by 2030, 100% by 2045
Property Tax Exemption100%
Sales Tax ExemptionNone 
Performance Payment ProgramSRECs at a rate of $2.5 per MW produced

Frequently Asked Questions

Do you actually save money going solar in New Mexico?

With great rates on equipment and th best sunlight in the country, homeowners in New Mexico have a great opportunity to save money on utilities. New Mexicans that purchase a 6kW system could see nearly $15,000 in returns throughout their system’s lifetime.

How long does it take for solar panels to pay for themselves in New Mexico?

With an average annual utility bill of $1,176.96, homeowners in New Mexico can expect to cover the cost of a 6kW system in about 12.4 years.

How much do solar panels cost in New Mexico?

New Mexicans can expect to pay about $2.44 per watt for solar energy. Ths equals around $16,460 for a 6kW system. Homeowners may see this price fluctuate with a few factors, including sunlight, location, panel type, and installation quality.

Can I use the federal tax incentive in New Mexico?

Homeowners in New Mexico can take advantage of the federal solar tax credit, which offers a 30% return on all purchases made toward an array. Those that install a 6kW system ocould save nearly $4,500 on labor, equipment, and sales tax.

Does New Mexico have an RPS?

New Mexico’s renewable portfolio standards (RPS) push for 50% of their energy come from renewable energy sources by 2030. It also pushes for a 100% renewable energy goal by 2045, which is one of the most aggressive RPS in the country.

Does New Mexico have a solar tax credit?

New Mexico offers a 10% income tax credit on all solar purchases for up to $6,000 off an installation.

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