FAQs:

New Solar Market Development Tax Credit (Regular)

(For systems installed in 2024 and beyond)

 

1. What is the New Solar Market Development Tax Credit? 

1. The New Mexico New Solar Market Development Tax Credit (NSMDTC) offers tax credits against New Mexico state personal income tax for purchasing and installing solar systems on residences, businesses, and agricultural enterprises in New Mexico.  

2. The tax credit provides up to 10% of the purchase and installation costs of a solar thermal or photovoltaic system. However, this credit is subject to certain limitations. It cannot exceed $6,000 per taxpayer per taxable year.  

  

2. Who is eligible to receive the tax credit?  

A taxpayer who has purchased and installed a solar thermal or solar photovoltaic system, as long as: 

1. The taxpayer is not a dependent of another individual.  
2. The taxpayer must have purchased and installed a solar thermal system or a photovoltaic system on or after March 1, 2020 (the date the new solar market development tax credit went into effect). 

 

3. What documents do I need to apply for New Solar Market Development Tax Credit?  

To apply for the New Solar Market Development Tax Credit, you must submit an application on EMNRD’s online application portal. On the application, please list all names, partnerships and titles listed as property owners. A complete application also includes the following documents uploaded as attachments:  

(1) A current property tax bill or other equivalent proof of ownership in the applicant’s name for the residence, business, or agricultural enterprise where the solar energy system is installed.  

(2)  A Building Code Inspection report that includes the name of the building code authority, permit number, and date of successful inspection. This information must be noted on a physical form, a photo of the inspection sticker, or a web-based report. Uploading your permit as an attachment is preferred. 

(3) An invoice that itemizes the cost of materials and labor for installing the solar energy system.   

(4) The solar energy system’s design schematic and technical specifications. 

 

  

4. Didn’t the legislature recently make changes to the solar tax credit? 

Yes. During the 2024 legislative session, the legislature made two important changes to the tax credit. 

First, they increased the cap on systems that EMNRD can certify from $12 million to $30 million in tax years 2024 and beyond.  

Second, they clarified that taxpayers living on tribal land and holding land in leasehold from a federally recognized tribe are also eligible for the credit. These changes address two key issues EMNRD had with the credit based on its experience administering it from 2020-2023. The legislature also created a special supplemental credit for individuals who installed their systems in years 2020-2023 but were unable to receive a credit because EMNRD had exceeded the cap in any one of those years. There is a separate FAQ section here for the supplemental credit.   

 When new provisions of the law take effect, EMNRD will expedite the required rulemaking process, and make updated applications available as soon as possible, hopefully June 2024. If your solar system is purchased and installed in 2024, you can either apply now, under the current rules, or wait until the rulemaking is complete, and apply under the new rules, which EMNRD hopes will be simpler. 

EMNRD expects to make the supplemental tax credit application portal available by June 2024.   

 

5. When are the tax credits available?   

Any New Mexico resident who installed a solar system is in 2024 eligible for a tax credit, and EMNRD is processing those applications now.  

Regarding the supplemental tax credit for prior years: when the law takes effect, EMNRD will expedite the required rulemaking process, and make applications available as soon as possible. EMNRD expects to make the supplemental tax credit application portal available by June 2024.   

  

6. To which tax year(s) does the $30 million credit cap apply?  

The $30 million annual allocation is effective starting in the 2024 tax year. It also will be in effect in subsequent years. If your system was installed in 2024 or after, you can apply right now here.  

Please note that EMNRD processes applications on a first come, first served basis. 

For any tax year, EMNRD can issue certificates for systems installed in that tax year up to the statutory cap. For years 2024 and beyond, that cap is $30 million dollars.  

 Once EMNRD has issued whole or partial credits totaling $30 million for a tax year, all subsequent applications for that year must be rejected by law. 

To obtain a certificate, taxpayers must submit a completed application package for certification of eligibility to EMNRD within twelve (12) months following the calendar year in which the system was installed. The application must include the required documentation. 

 

7. How will I know if my application is approved? 

If your application is approved, EMNRD will email a certificate of eligibility to the email address listed in your application. The certificate will specify the amount of the tax credit for which you are eligible and the taxable year in which the credit may be claimed.  

Once you have your certificate of eligibility, you can claim the tax credit on your income tax return for the taxable year in which you purchased and installed the solar system. 

 

8. What happens if my application is rejected? 

EMNRD may reject an application because: 

1. The application is incomplete – you are missing a document or did not fill out all the fields in the online form. 

1. The information within the application is incomplete or inconsistent – for example, an address is typed incorrectly, or does not match the address on the permit. 

 

If EMNRD rejects an application, you will receive an email at the address you provided, explaining the reason for the rejection. You can then correct any errors and resubmit, but please note that your application then goes to the back of the line. EMNRD processes applications first come, first served, and that process begins only with a complete and correct application. 

  

 

9. This credit can give me a tax credit up to $6000. But what if I don’t owe this much in taxes?  

This credit is a refundable credit, which means any amount above what you owe in taxes will be refunded to you by the New Mexico Taxation and Revenue Department.  

  

10. My solar contractor hasn’t responded or has gone out of business. What do I do?   

It may be possible for you to still receive a credit.  

EMNRD intends to treat systems installed by contractors who are non-responsive or no longer in business as “self-installed” by the applicant. However, the system must have passed an inspection and been deemed operational by a local building code authority (for example, the City of Albuquerque Building Safety Division, or Santa Fe Building Permit Division). If your jurisdiction does not have a building code authority, an inspection by a New Mexico licensed electrician may suffice. 

If your system is not ready for inspection, you will have to find and hire a different solar contractor to finish any work needed to pass inspection. Many solar contractors are willing to do this. 

 Please note that, while the above is our intent, this approach needs to be codified in rule, and cannot be implemented until approved. As noted above, we hope to have new rules in place by June 2024.  

In the meantime, if you wish to file a complaint against a New Mexico business, you may do so with the NM Department of Justice. Consumer Protection – New Mexico Department of Justice (nmag.gov)  

 

11. I need assistance, where can I get answers for further questions? 

 For more information, please visit our New Solar Market Development Tax Credit webpage: 

Solar Market Development Tax Credit (SMDTC) – Energy Conservation and Management (nm.gov)  

For further questions please email our main office email EMNRD.taxcredits@emnrd.nm.gov