IRS CODE
CHANGE

Renewable-energy tax credits can now be transferred tax-free to independent buyers in the for-profit sphere.

SOLAR TAX INCENTIVES

OE Solar has over 15 years' experience in working with financial institutions and tax credits related to solar projects, comprehensive project analysis, and credited payback periods, and financial modeling to maximize ROI's. We can offer you a clear project plan and guide you in the right direction to make the most of the tax credits available. This page is offered as a resource, and as new information comes available, this page will be updated and OE Subscribers will be notified.

OE Solar is committed to helping you understand how solar tax credits work and will be beneficial to your business operation, saving you money over the lifetime of the system. Solar can be a valuable investment for your business with the multitude of compounding incentives that are offered. From Federal to State incentives as well as EV Charger tax incentives we have compiled the information here to help you understand the new benefits that are now available to your business organization. Furthermore, many solar tax credits and incentives are available to encourage individuals and businesses to use solar more extensively. It is possible to recoup as much as 50% of the overall project costs in the first year alone. The incentives highlighted below are for corporate clients as this is the niche Market of OE Solar, the only Solar Company in New Mexico that specializes only in Commercial, Government and Small Utility Projects.

FEDERAL TAX INCENTIVES

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 10 years. Commercially owned PV projects that commence construction in 2022 are eligible to receive a 30% tax credit of the total PV system cost. Implementing

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. The tax credit is currently categorized by project size, distinguishing between those under 1MW and those over 1 MW in size.

Projects Under 1 MW in Size

These projects do not need to meet the labor standards of the Inflation reduction act to receive the full 30% ITC tax credit. These projects can receive the full 30% until 2025!

Projects Over 1MW in Size

These projects receive a 6% base tax credit of 6% when they place the system in service no later than January 1st 2025.

Base Credit: 6% - 30% (depending on project status and labor factors)

2024 - 26% Tax Credit
Domestic Content Bonus: 10% additional
Energy Community Bonus: 10% additional
Low-Income Community Bonus: 10% additional
Low-income Residential Building or Low-Income Economic Benefit Bonus: 20% additional

Eligible Technologies

Solar PV
Energy Storage Systems ESS

Key Factors of the ITC:

Upfront Tax Credit: The ITC provides an upfront tax credit that remains consistent regardless of system performance.
Attractive for Smaller-Scale PV and CSP Projects: Smaller-scale photovoltaic (PV) and concentrated solar power (CSP) projects often find the ITC more beneficial, especially if they can tap into low-income bonus credits, which are unavailable with the PTC.

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Modified Accelerated Cost Recovery System (MACRS)

The Modified Accelerated Cost Recovery System (MACRS) is a depreciation plan that allows business owners to recover depreciation costs on their solar investments through tax deductions.

Available for Level -2 Electric Vehicle Service Equipment
Available for DC Direct Current Fast EV Charging Equipment
Available for Solar Electric Photovoltaics

Note: The Tax Cuts and Jobs Act of 2017 increased bonus depreciation to 100% for qualified property acquired and placed in service after September 27, 2017 and before January 1, 2023. Bonus depreciation steps down by 20% each year beginning with 80% in 2023..

The choice between the Investment Tax Credit (ITC) and the Production Tax Credit (PTC) hinges on various factors, including project cost, solar exposure, and potential bonus tax credits. As the costs of PV and CSP systems decrease over time, or as they generate more electricity, the PTC could become increasingly appealing across all sectors. It's essential to analyze these factors carefully to make an informed choice that aligns with your specific project goals and circumstances.

Production Tax Credit:

Earned Over Time: The PTC, on the other hand, offers tax credits that accrue over time, creating a potentially more attractive cash flow.
Ideal for Large-Scale PV Projects in Sunny Regions: Large-scale PV projects in sun-soaked areas generally gain greater value from the PTC.
Consider Sunny Locations and Bonus Credits: Sunny locations and eligibility for bonus tax credits play a significant role in the decision-making process.

Factors to Consider:

Solar Exposure: The amount of sunlight available is a crucial factor. Sunnier locations may favor the PTC, while less sunny areas may lean towards the ITC.
Installation Costs: High installation costs may sway the decision towards the ITC.
Bonus Tax Credits: Projects eligible for bonus tax credits are more likely to benefit from the ITC.
Project Size: Project scale matters. Larger projects might opt for the PTC, while smaller ones often find the ITC more advantageous.

ITC Tax Adders to base 6%

Image by Money Knack, www.moneyknack.com

Certified Payroll & Apprenticeship Program

24% Adder

Domestic Content

10% Adder

Energy Community

10% Adder

Low to Moderate Income

10% - 20% Adder

ITC

SustainTaxCredit

Clean Energy STATE TAX INCENTIVES

Solar Market Development 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.

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The New Mexico state government offers this Sustainable Tax Credit for taxpayers who convert to solar. The Incentive value is up to $6.50 per square foot for sustainable design.

New Mexico Sustainable Building Tax Credit (SBTC)

Tax credits for energy efficiency in existing homes
Tax credits for sustainable new residential construction and commercial renovation

Unfortunately, solar panels aren’t included in the list of eligible products for existing homes. However, the tax credit is available for electric vehicle chargers. In the case of new construction, the SBTC is available for homes that meet any of the four following requirements:

Build Green NM Gold or Emerald
LEED Residential Gold or Platinum

Solar panels can help you qualify for either certification by reducing the Home Energy Rating System Index of your new home. However, you can’t qualify with solar panels alone because both certification systems cover multiple areas of home performance.

The SBTC has a budget of $7.15 million. It’s not a solar-only incentive, but solar panels help you qualify when you combine them with other energy conservation measures.

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.

This means that for solar based on where you live you could pay between 6% -8% in gross receipts on the Solar PV System. The state updated the rule in 2010 to also include wind from gross receipts tax. This can be a savings of $17,500 dollars on a $250,000 dollar system.

EV & BESS INCENTIVES

Commercial Property Assessed Clean Energy

C-PACE, short for Commercial Property Assessed Clean Energy, is a groundbreaking financing tool used by local governments. It allows commercial, industrial, and multi-family property owners to finance energy efficiency and renewable energy improvements through their property tax payments. This innovative approach not only reduces the financial burden on property owners but also accelerates the adoption of clean energy technologies.

Why is it important? C-PACE addresses two pressing needs simultaneously. First, it enables property owners to access affordable, long-term financing for energy efficiency, renewable energy, and water conservation upgrades in their buildings. This is crucial for reducing our carbon footprint and conserving resources. Second, it stimulates economic growth by creating jobs and fostering innovation in the clean energy sector. It's a win-win for the environment and the economy.

Here at OE Solar, we specialize in helping developers navigate the intricacies of C-PACE. Our experts have an in-depth understanding of the program's nuances and can guide you through the entire process. From project assessment and financing to compliance and implementation, we're here to ensure your development not only meets sustainability goals but also maximizes financial benefits.

Let us be your partner in building a greener, more prosperous future. Together, we can harness the power of C-PACE to create sustainable, vibrant communities while driving your projects towards success.

PNM offers residential customers a $500 rebate for the purchase of a Level 2 ENERGY STAR certified EV charging station. For more information, including eligibility requirements, see the PNM EV Discounts and Rebates website.

Residential

Get a $500 rebate for installing a networked Level 2 residential charger.
Income-qualified residents: Receive an additional rebate up to $2,000.
Must install eligible chargers with an approved PNM Contractor

Commercial

Get $2,500 for installing Level 2 chargers
Get $25,000 for installing DC Fast chargers
Income-qualified properties: Receive a rebate up to $2,500 per charger port.
Must install eligible chargers with an approved PNM Contractor

Multifamily

Get a $2,500 rebate for installing a Level 2 charger.
Income-qualified communities: Receive a rebate up to $5,000 per charger port.
Must install eligible chargers with an approved PNM Contractor

A Battery energy storage system is a device that can store electricity from your PV. The State of New Mexico offers a tax credit for buying and installing such a system on your property, as long as it is certified.

The tax credit is 40% of the costs, up to $5,000 for residential property and $150,000 for commercial or agricultural property.
You can only get the credit for one system per property.
The credit does not cover the costs of energy generation equipment or installation.

Vehicle Refueling Property Tax Credit

Taxpayers are eligible for a credit of 30% of the hardware and installation costs for EV chargers installed at their homes. It’s a one-time, nonrefundable tax credit for a maximum of $1,000.

Residential EV chargers can cost anywhere from $200 to $1,800, depending on the type of charger you get installed. OE Solar works with several different brands to ensure our customers get the right product that fits their needs. Some customers may need to update their electricity panel to accommodate the new charger, which increases the cost of the Electric Vehicle charger. This cost is also covered by the 30% tax credit.

The new IRA now also covers bidirectional charging equipment, which wasn’t in the previous credit. Bidirectional EV chargers charge your car using the electricity in your home, and they can also send energy from your car back to the grid or your house. Another change is that taxpayers can now claim credit for EV chargers for two- and three-wheeled vehicles, such as motorcycles.

IRS Form 8911 may give you an idea of how much you qualify to receive as a tax credit. Just make sure you save your receipts for when you file your taxes.

IRS CODE CHANGE

SOLAR TAX INCENTIVES

FEDERAL TAX INCENTIVES

Clean Energy STATE TAX INCENTIVES

EV & BESS INCENTIVES

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IRS CODE
CHANGE