What is the solar tax credit?
The Federal solar tax credit was implemented in 2006, and it enables you, as a solar energy consumer, to deduct 26% of the cost of installing your solar energy system, from your federal taxes. It is simply based on the amount of your investment in solar property, and applies to both, residential and commercial properties.
The Solar Market Development Tax Credit is a credit specific to New Mexicans and can be applied for now through 2027. You can deduct up to 10% of the cost on installation! This combined with the 26% Federal tax credit can get you back up to 36% total! Go to the EMNRD Tax Incentives website to learn how to apply.
The ITC is greatly responsible for the extreme growth of the solar industry in the United States. It’s contributing to the fight against climate change, and has proven to be successful and effective when it comes to reducing emissions and promoting clean energy, as solar energy is continuing to grow rapidly throughout the country!
Would you like to apply credit to your own personal income taxes? Of course, you would!
Solar power users: Don’t forget to claim your Federal solar investment tax credit AND your Solar Market Development Tax Credit for the state of New Mexico! As long as you own your solar energy system, you are eligible for both tax credits.
The solar tax credit is fighting climate change. It is no secret that carbon, along with other greenhouse gas emissions, have greatly increased over the past few decades, and our planet is in jeopardy because of it. Solar energy is a large contributor to fighting this climate crises. It is renewable, carbon free and affordable! And the ITC gives you a reason to buy in. Most can agree that a strong tax incentive is the best and most efficient way to encourage solar energy installations on your properties!
As effective and productive as the ITC is, percentages are changing for the future as the years pass. Originally, the ITC was set to expire in 2007, but due to its popularity and success, it has been granted extension after extension. The ITC is now gradually headed towards a decline. It must be true that nothing great lasts forever. There is still plenty of time to enjoy your solar tax credit, but here’s the heads up:
Currently the Federal Tax Credit (ITC) is 26%, and combined with the 10% NM Solar Market Development Tax Credit, that is a potential savings of 36% on your solar installation costs! Here are all the ways that the ITC has, and still will, positively affect the earth:
- The ITC is lowering the cost of rooftop solar power, and is bringing access and affordability to the concept of clean energy in the United States for home and business owners.
- It is largely responsible for the extreme growth of the solar industry throughout the years. (A 50% compound annual growth rate since it was put in place in 2006)
- The growth of the solar industry is creating hundreds of thousands of jobs nationwide, and is even investing billions of dollars in the US economy.
- Progress towards the decarbonization of the US energy system means reducing pollution, which results in a healthier future for you and the generations to come.
- The ITC leads to a stronger and cleaner economy!
The solar ITC schedule is undergoing change, and it is important to be aware of this. As mentioned, the solar tax credit percentage will begin dropping in 2020. It will continue to decrease little by little each year, leading to an eventual complete phase-out by the year of 2024. The last year for residential credit will be 2023, while commercial credit will remain at a permanent 10%. As a solar power user, it is important to take advantage of the Federal and NM State tax credits while you still can!
Federal – form 5695, irs.gov website.
• 2020-2022: Owners of new residential and commercial solar can deduct 26% of the cost of the system from their taxes.
• 2023: Owners of new residential and commercial solar can deduct 22% of the cost of the system from their taxes. Last year for residential tax credit.
• 2024: Owners of new commercial solar energy systems can deduct 10% of the cost of the system from their taxes. There is no federal credit for residential solar energy systems.
NM State – 2020 thru 2027 Solar Market Development Tax Credit – EMNRD Tax Incentives
Customer references:
Energy, Minerals & Natural Resources Department (EMNRD) – (505) 476-3310
Customer certificate questions or to have it resent to them.
PNM – (505) 241-3350, or call your respective electric utility.
Customer needs the Interconnection Agreement resent.