Taxpayers eligible for new solar market development income tax credits in 2023

On March 17, 2025, the New Mexico House of Representatives introduced House Bill 218, aimed at enhancing the state's solar market development through a series of tax incentives. The bill seeks to stimulate investment in solar energy by providing a new income tax credit for taxpayers who install solar systems.

Key provisions of House Bill 218 include a mechanism for taxpayers to apply for the credit within twelve months of receiving a certificate of eligibility. This application must include a certification as outlined in the bill. Notably, any portion of the solar market development income tax credit that exceeds a taxpayer's liability will be refunded, ensuring that individuals can benefit from the credit even if it surpasses their tax obligations.

The bill also addresses the situation of married individuals filing separately, stipulating that they may each claim only half of the credit that would have been available had they filed jointly. Furthermore, it allows for the allocation of the credit among partners in a business entity, such as a partnership or limited liability company, based on their ownership interest, while capping the total credit claimed by all members to the allowable limit.

Debates surrounding House Bill 218 have highlighted concerns regarding its fiscal implications and the potential impact on state revenue. Critics argue that while promoting solar energy is essential, the financial burden on the state could be significant if the credits are widely utilized. Proponents, however, emphasize the long-term economic benefits of investing in renewable energy, including job creation and environmental sustainability.

As the bill progresses through the legislative process, its implications could resonate beyond immediate tax benefits, potentially influencing New Mexico's energy landscape and contributing to broader efforts to combat climate change. The outcome of House Bill 218 will be closely monitored by stakeholders in the renewable energy sector and state policymakers alike.