OE Solar is committed to helping you understand how solar can be a valuable investment for your business. The Land of Enchantment is also the land of sunshine: New Mexico receives 280 sunny days per year; this weather makes it an excellent place for solar technology.
Furthermore, many solar tax incentives and financing options are available to encourage individuals and businesses to use solar more extensively. It is possible to recoup as much as 50% of installation costs in the first year alone.
Federal Solar Tax Incentives
Federal Investment Tax Credit (ITC).
The Federal Investment Tax Credit (ITC). Businesses that install solar photovoltaic (PV) systems are eligible to receive an (ITC) investment tax credit, which can be used to offset federal tax liability on a dollar-for-dollar basis. If the tax credit exceeds your tax liability, you can roll the credit forward into future tax periods for up to 20 years. Commercially owned PV projects that commence construction in 2022 are eligible to receive a 30% tax credit of the total PV system cost. After that, the ITC steps down: 2023 projects qualify for a 26% ITC; 2024 and later commercial projects may not be eligible for an ITC.
Modified Accelerated Cost Recovery System (MACRS)
The second Federal commercial solar incentive is the Modified Accelerated Cost Recovery System (MACRS). MACRS is a depreciation plan that allows business owners to recover depreciation costs on their solar investments through tax deductions.
Plug-In Electric Drive Vehicle Tax Credit
Taxpayers may use Form 8936, provided the new plug-in electric vehicle that they purchase meets certain eligibility requirements. Tax credits reduce the amount of income tax that a taxpayer owes, dollar for dollar.
We will help you identify incentive programs that make sense for your project, maximizing financial benefits and reaching your goals.
State Solar Tax Credits
NM PV – State Tax Credit
Also known as the Solar Market Development Tax Credit, the NM PV provides a tax credit of 10% for small solar systems, including on-grid and off-grid PV systems and solar thermal systems. The starting date for this tax credit is March 1, 2020, and the tax credit runs through December 31, 2027. There is a cap of $12 million in tax credits to be issued every year on a first-come, first-serve basis. There is a tax credit cap of $6,000 per project.
Sustainable Building Tax Credit (SBTC)
ECMD manages the Sustainable Building Tax Credit (SBTC), which benefits New Mexicans by incentivizing builders to build energy-efficient, healthy, comfortable homes.
Commercial Property Assessed Clean Energy (C-PACE)
C-PACE is a financing mechanism used by local governments that allow commercial, industrial, and multi-family property owners to finance energy efficiency and renewable energy improvements through their property tax payment.
Net Metering is a residential and commercial program that allows you to sell back excess solar electricity to PNM in return for credits that can be applied to future electric bills. Another advantage of Net Metering is it removes the need to purchase battery storage for your solar system. Net Metering streamlines owning and generating your own electricity and is available in New Mexico.
Advanced Energy Gross Receipts Tax Deduction
New Mexico has a gross receipts tax structure for businesses instead of a sales tax. Businesses are taxed on the gross amount of their business receipts each year before expenses are deducted. Revenue generated by the sale and installation of a “qualified generating facility” may be deducted from gross receipts before the gross receipts tax is calculated. The deductions are allowed for a 10-year period starting the year construction begins. Qualified generating facilities have a minimum nameplate capacity of 1 megawatt (MW) and include geothermal thermal electric, photovoltaic, solar thermal electric, and recycled energy systems. Solar facilities with associated renewable energy storage facilities are also eligible.
To qualify for the exemption, the owner of a qualified generating facility must first obtain a certificate of eligibility from the Department of Environment. The owner must then present the certificate of eligibility to the Taxation and Revenue Department to obtain a nontaxable transaction certificate. The owner must then give the nontaxable transaction certificate to the seller of the equipment. This credit can be claimed on equipment leased in addition to equipment purchased.
Rural Energy for America Program (REAP)
Under the USDA Rural Energy for America Program, rural small businesses and agriculture producers are provided guaranteed loan financing and grant funding for the purchase, installation and construction of energy efficiency improvements.
Farmers and rural business owners across the US are lowering their bills and tapping into a more reliable power source by converting to solar. Most of our New Mexico farmer’s solar-electric project costs are covered by these grants and loans for least 25%.
The most direct way to buy solar panels is with cash. Because you avoid paying interest and loan fees, you’ll save more money over the life of your solar panels.
However, it will take a while before you recoup the money you’ve spent. That period is called a payback period, and it’s a valuable piece of information when deciding whether or not paying in cash is a good option for you.
Solar loans are widely available. Customers interested in learning more, or who would like to get approved for solar financing should contact us online to set up a free solar consultation. OE Solar can answer your questions, get you approved, and lock in a low-interest rate.
PPA (Power Purchase Agreement)
With a PPA you get clean, solar electricity at a predictable rate. We install solar on your property for a much lower cost than what your current utility provider can typically provide. By using a PPA, savings can trickle down to your leasees making you your own property’s solar electricity provider.