Summary: The current solar tax credit provides a 10% credit of up to $6,000 for those that have tax liability, but not to those who cannot use a tax credit. This bill makes the credit refundable (as is proposed in the US Senate’s Build Back Better Bill) so that all New Mexicans can participate in the energy transition and equitably reach New Mexico’s goals as stated in the Energy Transition Act. It also increases the amount of total credits available each year from $8M to $16M and extends the program end date from 2028 to 2032.
Why Is This Legislation Good for NM?
First, it will greatly expand the pool of New Mexicans who can benefit from the credit, opening the door to low-moderate income residents.
- NM’s median income is about $46K/ year. Only those with taxable income above $122K can immediately use the full $6,000 credit.
- HB34 – SB 44 makes the credit refundable (as is proposed in the US Senate’s Build Back Better Bill) so that all New Mexicans can participate in the energy transition. Thus even someone paying little or no taxes can benefit, and the refund makes installation even more affordable to those households with limited savings.
- Making the credit equitable and refundable will enable between 2 and 6 times the number of New Mexicans to participate; therefore the pool of funds needs to be larger.
HB 34 – SB 44increases the amount of credits available from $8M to $16M, ensuring that with increased demand, the pool doesn’t run out of funds.
It will continue to strengthen the solar industry, enabling it to continue creating local jobs, fighting climate change, and promoting local economic development.
HB 34 – SB 44 will continue to stimulate the solar industry and community solar development, which provides more economic benefit to NM residents than large centralized energy development because it creates local jobs with employees who spend their salaries locally.
According to the Renewable Energy Industries Association (REIA) that has endorsed this legislation:
- There are at least 70 solar companies now operating in New Mexico, employing nearly 2,000 New Mexican residents.
- A total of over 1,200 megawatts (MW) of solar energy has been installed in New Mexico to date, enough to power nearly 300,000 homes.
- The solar industry has invested over $2 billion in New Mexico, including over $300 million in 2020.
HB 34 – SB 44 extends the expiration date from 2028 to 2032. Like Federal programs, a 10-year timetable is needed for businesses to have the certainty to invest in long term efforts that will cut costs and accelerate the installation of solar systems.
Solar companies will inform many more residents about this opportunity, who will become aware of solar and that they can participate. This will lead to more local solar installations, more local solar jobs, more local economic development, and to New Mexico achieving its climate change goals sooner.