If you’ve been considering a solar project in Albuquerque, you might want to understand what changed for 2026. The Residential Clean Energy Credit (the residential federal solar tax credit) is not available for any property placed in service after December 31st, 2025. However, homeowners may still be able to claim the credit if their solar project was placed in service before this date, and unused credit may carry forward.
Things you need to know about the Federal Solar Tax Credit
The solar ITC can help you significantly offset installation costs.
The solar ITC is a 30% tax incentive on your gross solar system cost and the single largest incentive currently available. This came about as part of the Energy Policy Act in 2005. The federal government extended the incentive expiration date twice, with the incentive ending December 31, 2025. As an example, on a solar system that costs $10,000 to install, you would receive $3,000 as a credit on your gross income tax, so the net cost would only be $7,000.
Is there any catch to getting the solar ITC tax credit?
You can only qualify for the solar ITC if you own your solar system or are financing it through a solar loan. You also need to owe income tax. For example, if your 30% tax credit is $5,000, but you only owe $3,000, you can rollover the remaining $2,000 to next year’s income taxes.
You also need to have your system placed in service by December 31, 2025 to be eligible for the residential credit, based on current IRS guidelines.
What’s the Solar Tax Credit Status in 2026?
In 2026, the residential federal solar tax credit is not available for property placed in service after December 31, 2025. If your project was placed in service prior to 12/31/2025, you may still be able to claim the credit and carry forward unused amounts, depending on your tax situation.
Solar Tax Credit Timing:
- Residential (Homes): Not available for property placed in service after 12/31/2025.
- Business/commercial projects: Federal incentives follow different rules and should be reviewed with a tax professional
New Mexico Solar Tax Credit:
If you are a homeowner in Albuquerque, Santa Fe, or anywhere in New Mexico, you may qualify for the New Solar Market Development Tax Credit (NSMDTC). This is a state income tax credit that can help reduce your New Mexico personal income tax bill. This credit covers up to 10% of eligible equipment, materials, and labor costs. The maximum credit is $6,000 on eligible systems including solar photovoltaic or solar thermal systems. For Albuquerque homeowners, this credit can be especially helpful if you’re trying to offset higher summer cooling costs and get more value out of the city’s long, sunny season.
Final Tips if you are considering going solar:
- Shop around, do your research and seek out testimonials when choosing a solar installation company, but remember: over-analysis often results in paralysis.
- At SunState Solar, we cut through all the noise and too-good-to-be-true claims to make going solar simple and easy. Schedule your free consultation today!