Solar Tax Credits

Arizona Leads Way Thanks to Solar Incentives
One of the sunniest states in America, Arizona is ideal for solar power. So it comes as no surprise that the state tops the charts across solar metrics categories. Combine generous, year-round sunshine with Arizona’s solar incentives, along with the federal solar tax credit, and you see why there’s widespread homeowner participation moving to solar in Arizona.

Arizona Renewable Portfolio Standards
Renewable Portfolio Standards,or RPSs, are quite strong in Arizona. These standards give utilities a deadline by which they must acquire a certain percentage of the state’s power from renewable energy sources or else pay a fee. In Arizona, sources such as wind, solar, biomass, and geothermal need to account for 15% of the state’s power production by 2025. Naturally, instead of paying the fees, utilities in strong RPS states offer incentives to get homeowners into solar. Arizona’s RPS mandate that 15% of all energy must come from renewable sources by 2025.

Arizona Solar Energy Carve-Out
A solar carve-out is the portion of energy in a state that needs to come from solar by a certain date. RPS, above, is about all renewable energy sources, but the solar carve-out is a requirement just for solar. In Arizona the carve-out is 2.25% by 2025.

Arizona State Electric Rates
Arizona’s electric rates rank 18th in the country for high cost; 32 other states are cheaper. As you can imagine, higher electric rates make an investment in solar energy more cost-effective. Arizona’s high electric rates make investing in solar power more attractive.

Arizona Net Metering
Arizona offers excellent net metering laws. When it comes to solar panels, these laws govern how the panels are connected to a public utility and how the energy is metered. Homeowners are able to lower their monthly electric bill when the utility sucks up excess power produced by the home solar energy system.

Arizona Residential Solar Energy Credit
Arizona’s Residential Solar Energy Credit allows homeowners to save a bundle on their solar panel system. This credit alone pays you back 25% of the system’s cost, capping at $1,000. If the credit exceeds your total income tax owed the year you installed the system, you can carry the credit forward for up to 5 years.

Arizona Sales Tax Exemption
Any homeowner who purchases a solar panel system in the state of Arizona is exempt from paying sales tax on it.

Arizona Property Tax Exemption
Similarly, the Energy Equipment Property Tax Exemption means you won’t have to pay any more property taxes on the value you are adding to your home by investing in a solar energy system.

Arizonans, Don’t Forget the Federal Solar Tax Credit
The Federal Investment Tax Credit (ITC) is available to Arizona homeowners who purchase their solar panel system outright. This credit currently amounts to 26% of your solar system’s cost after deducting the value of your state rebates. In 2021, the tax credits for installations will drop to 22%. This is one of many reasons why it makes sense to go solar without delay.

New Mexico Renewable Portfolio Standards
New Mexico’s Renewable Portfolio Standards (RPS) have come due. The goal was 30% by 2020; that is, 30% of all the state’s energy must come from renewable sources by now. Utility companies pay fees if they miss the deadline, motivating them to offer deals.

New Mexico Solar Carve-Out
Solar carve-outs require a certain percentage of a state’s renewable energy to come from solar by a certain deadline. The solar carve-out in New Mexico is a relatively big 4% by 2020 (in other states it is 0.3%).

New Mexico Net Metering
Strong and clear net metering laws are a bonus in New Mexico. Net metering is a system in which solar panels or other renewable energy generators are connected to the public utility, allowing customers to offset the cost of the power they draw from the utility with credits they have earned through their home energy system. If your system produces more energy than you need, the excess power is sold to the grid, which you see as a credit on your power bill.

New Mexico Interconnection Standards
Interconnection standards are requirements for connecting solar and other electrical generation systems to the grid. They make installation easier and usually less expensive, and net metering is more reliable too. The standards in New Mexico are among the best in the nation.

New Mexico Solar Tax Credits
The tax credit is good for 10% of the purchase price and installation of your solar power system, up to $9,000. Just take the amount directly off your tax payment, like it’s cash. This makes it a more valuable credit than a mere deduction from your taxable income.

New Mexico Performance-Based Incentives (PBI)
The state offers PBIs, which are incentives based on the actual power your system generates. New Mexico calls them Solar Power Performance Payments. How it works is you get paid based on the actual kilowatt-hours (kWh) or BTUs generated by your renewal-energy system. The power produced is credited as Solar Renewable Energy Credits (SRECs), the value of which fluctuates by the rule of supply and demand.

New Mexico State Sales Tax Exemption
Pay no state sales tax on the purchase of an installed solar energy system.

New Mexico Property Tax Exemption
The value of your home in New Mexico will not be reassessed after the addition of a solar system. You keep paying property tax based on the value before adding the system.

Don’t Forget the Federal Tax Credit, New Mexico!
On top of these great rebates and exemptions for you living in New Mexico, you also qualify for the hefty tax credit from the Federal government. The Investment Tax Credit (ITC) is worth 26 percent of the system cost, and will be deducted from your Federal income tax. The credit goes to those who buy their system (cash or loan), not to those who lease. If you lease a system, incentives go to the third-party owner. That’s a great reason to buy, not lease!

Texas Property Assessed Clean Energy Financing
Also known as PACE, Property Assessed Clean Energy Financing gives Texans the option to finance a solar panel system installation by placing an assessment on their land. The amount that is financed can then be paid via property taxes on a yearly basis until the system is paid off. It’s important to note that not all local governments offer PACE financing. Let Energybillcruncher connect you to a few local installers so you can learn more!

Federal Tax Credit
In addition to the above, Texans who install a solar system and own said system get the added benefit of the Federal Investment Tax Credit. This credit allows solar owners to deduct 26% of the system’s cost from their Federal taxes. Starting in 2021, that percentage is expected to drop to 22% and will likely continue to fall as the years go on, so don’t delay when it comes to exploring your panel options!