2023 Solar Incentives Guide for Farmington, NM - Tax Credits & Rebates
In this guide, we'll cover the latest solar incentives and rebates available in Farmington.
You'll learn about:
- Local & State Solar Incentives
- Federal Tax Credits (Updated for 2023 and beyond)
- Ways to optimize your solar investment
Solar installers are experts in maximizing your solar tax credits and rebates.
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Updated September 15, 2023
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What Solar Tax Credits, Incentives, and Rebates are Available in Farmington?
Property Tax Exemption for Residential Solar Systems
Solar Energy Gross Receipts Tax Deduction
Geothermal Heat Pump Tax Credit (Personal)
Geothermal Heat Pump Tax Credit (Corporate)
Local Option - Renewable Energy Financing District/Solar Energy Improvement Special Assessments
Federal Residential Renewable Energy Tax Credit
Source: https://www.dsireusa.org/
The term "solar incentives" refers broadly to financial incentives implemented by the government and by solar companies to encourage the adoption and use renewable energy by making solar panels more affordable. You may qualify for various kinds of incentives, such as discounts, cash back or monthly utility bill credits, depending on your situation. Some incentives come from your specific utility company, county or municipality, some from the state of New Mexico and others from the federal government. Categories of solar incentives include:
- Net Metering: Net metering factors in once your solar panels are up and running. If you've signed a net metering agreement with your Farmington utility company, they will subtract the value of the excess energy produced by your solar system from your utility bill each month. In some areas, this is a dollar-for-dollar credit, while in others you might receive a refund equivalent to a percentage of the value.
- Tax Credits: These credits are dollar-for-dollar reductions (not deductions) in how much income tax you owe the government.
- Tax Exemptions: Sales tax exemptions are effective at the point of sale for your solar panels. Property tax exemptions allow you to exclude the added value of your solar system when you calculate the amount of property tax you need to pay.
- Rebates: A rebate is a partial refund given after you've purchased your solar panels. Rebates might be offered by your local utility company, your state or your county. The discount that rebates offer is normally applied to the price of solar panels before calculating tax credits.
Federal Solar Incentives
When thinking about solar incentives, you likely think of federal incentives first. The Federal Solar Investment Tax Credit, or ITC, is the most well-known federal solar incentive. The ITC provides a tax credit for a predetermined percentage of your solar system's cost.
The ITC can be applied to solar systems installed after January 1, 2006 on a primary or secondary residence that you own in the United States. The credit initially covered 30% of the total cost — for panels, equipment, labor and accessories — although that amount may range from 26-30%, depending on the installation date of your solar system. There is no cap on the claim amount.
Curious how the ITC might apply to your specific situation? Contact your local Farmington solar panel installation expert to get more information.
In August 2022, the Inflation Reduction Act made revisions to the ITC, now called the Clean Energy Credit. For solar system installations that begin after January 1, 2022 and are completed by the end of 2032, homeowners may be eligible for a credit for 30% of the total cost. After 2033, the percentage will decrease annually until the Clean Energy Credit expires in 2035. Starting in 2023, the program expansion will also make it easier to get credit for energy storage systems.
Click here to learn more about the new Inflation Reduction Act. Your local Farmington solar panel installation experts can answer any questions you have and explain how the new Clean Energy Credit applies to you.
State & Local Solar Incentives
Some solar incentives are often also offered at the local or state level. Similar to federal incentives, these may include tax credits, rebates and more. Certain incentives are ongoing, while others are offered for only a limited time. These local incentives could come from the New Mexico government, or from your specific county or municipality.
Next Steps for Installing Solar in Farmington
The large number of solar incentives available has enormously increased the adoption of solar energy nationwide over the last 15 years. You may receive solar incentives from the federal government, the New Mexico government or from your local utility company. Talking to your local Farmington solar panel installation company is the best first step towards getting all the incentives you qualify for when you switch to solar energy.
EcoWatch's Farmington, NM Solar Incentives FAQs
Can I receive any incentives when I add solar panels to a rental property, vacation home or commercial property?
Many solar incentives apply to a property located within the United States that you own, and most secondary residences will fall into this category. There may be other solar incentives available for commercial properties, depending on the details. We recommend speaking with your local solar installer and/or tax professional to best understand what incentives may apply to your specific situation.
How can I find out if I qualify for different solar incentives?
Generally, solar incentives apply to:
- a new solar panel system
- installed on property you own
- within the U.S.
- within the date range specified by a particular incentive.
Specific incentives, including those given out by the New Mexico government or by your county/municipality, could have additional qualifications. Talk to your local Farmington solar installer to find out what incentives your project will qualify for.
How much will solar panels save me annually on my electric bill in Farmington?
Once you add solar panels to your home in Farmington, you can anticipate savings of about $1,026.70 per year, or about $19,507.33 over the next 20 years.
When does the federal solar tax credit end?
The Clean Energy Credit (previously referred to as the federal solar tax credit, or ITC), is scheduled to end on January 1, 2035. Currently set at 30%, the credit will drop to 26% in 2033 and to 22% in 2034.
Can I apply for incentives both towards the up-front cost of solar panels, and later as reimbursement?
The order that incentives will be applied in may vary depending on which incentives you are claiming but in most cases yes, you can receive multiple types of incentives for your solar project. Talk with your solar installer or a local tax professional to confirm you are claiming all of the incentives you qualify for and applying them in the correct order.
Our goal is to reach as many people as we can with sensible solutions like solar energy. Our team of full-time local researchers collects solar price and installation data for every city in America then compiles it to create these digestible city guides. If you want to read our solar expert's opinion on the top solar companies featured here, follow this link.
Solar incentive research was conducted by Melissa Smith and Karsten Neumeister. Local data analysis was conducted by James Savino. See something we missed or could do better? Email the editor.