New Mexico Solar Tax Credit

Sunny New Mexico is a great state to install solar panels, generate energy, and enjoy saving your family budget. To make the purchase easier from the start, take advantage of Investment Tax Credit. Here is our guide on how to claim Solar Tax Credit in New Mexico.

What is the Solar Tax Credit?

The ITC, also known as the Solar Investment Tax Credit, enables businesses and homeowners to claim a tax credit equivalent to 30% of the solar panel system's cost. Unlike a rebate, the ITC directly decreases the income tax owed.

The Solar Tax Credit is applicable to installations completed before December 31, 2034, providing a 30% credit. This percentage decreases to 26% in 2033 and further to 22% at the beginning of 2034.

How does the New Mexico Solar Tax Credit work in practice?

For example, if a household installs a $20,000 solar panel system, they can subtract $6,000 from their income taxes, resulting in a net cost of $14,000. Any remaining credit can be carried over to subsequent years, ensuring the fulfillment of the promised 30% solar incentive.

Read also

U.S. Climate Bill: 30% Solar Tax Credit comes back

To be eligible for the ITC, the solar energy system must be owned, with leased systems not qualifying. Installation must take place in the United States, and the solar PV system should be new or used for the first time. For PV installations on boats or RVs, they can be claimed as a second home.

How do I get a solar tax credit in New Mexico?

The Solar Tax Credit is claimed after the solar system installation. Detailed records, including invoices and receipts, must be kept to demonstrate qualified expenditures, such as solar panels, inverters, mounting equipment, and labor costs. While not initially required, these documents may be necessary in the event of an audit.

To claim the credit, homeowners must complete IRS Form 5695 and attach it to their federal income tax return. Residential energy credit information should be added to Schedule 3 (Form 1040), and the tax return must be filed by the applicable deadline.

Need help? Follow our guide!

We cover filling out the forms for claiming ITC step by step

Step-by-step guide

Benefits of the New Mexico Solar Tax Credit

The New Mexico Solar Tax Credit covers not only solar panels but also equipment, shipping, and labor expenses. There is no cap on the amount that can be claimed back.

Additionally, beyond the federal tax credit, New Mexico offers state-level incentives and rebates for solar installations, further reducing upfront costs. For more details, refer to our guide on New Mexico solar incentives.

Julia Zaraeva

Author

Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.

More articles from this author