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Do I qualify for tax credits and rebates?
The Inflation Reduction Act (IRA), New Mexico state and electricity providers offer consumers financial incentives to lower their energy bills with more efficient appliances and weatherization, access renewable energy and improve their indoor air quality. Incentives come in the form of tax credits and rebates that can be stacked or combined for greater savings with some caveats.
- Eligibility for different programs depends on your household income, household size and location.
- For New Mexico IRA Home Energy Rebates, only households with income less than 80% of the Area Median Income (AMI) or who participate in these programs qualify. Find out if you qualify here.
- Federal tax credits are nonrefundable. If you don’t pay federal tax, you are not eligible for the credit. If you owe $1000, then any tax credit you apply for is capped at that amount.
- An exception is the EV tax credit. You can transfer the maximum tax credit to participating dealers for an instant discount provided the EV and your income qualify.
- In figuring out a federal tax credit you must subtract any rebates from utilities and manufacturers from the cost before figuring your tax credit. You do not have to subtract any state incentives.
- Most of the New Mexico tax credits are refundable, meaning you will get the tax credit amount whether you pay taxes or not. The Sustainable Building Tax Credit is only refundable if your income is < 200% of the Federal Poverty Guideline. We expect that the NM Clean Cars tax credit will also be available as an immediate discount at the dealership next year after the Legislature meets. NM was the first state to apply for the IRA Home Energy Rebates, and will be the third state to implement them.
Below are some of the available incentive programs. It is not an inclusive list and more programs may be coming! Several low-interest loan and utility on-bill financing programs are in the works in addition to existing green loan programs at several credit unions, with special rates for low-income and underserved communities.
Does my install qualify for tax credits and rebates?
We are not tax or legal professionals so please do your own due diligence.
Your installer should know if your heat pump or other improvement qualifies for federal and state tax credits and rebates. The gold standard for documenting your heating/cooling systems’s efficiency performance values for tax credits is a certificate from the AHRI Certification Directory, or finding your unit(s) on the CEE/AHRI spreadsheets. However, it’s our impression that all you need for federal taxes is a manufacturer’s certificate verifying that the product qualifies for the incentive. You do not file it with the IRS, but keep it in case of an audit. Rewiring America says even a screenshot of the manufacturer’s website showing it qualifies for tax credits should be sufficient. Ask your tax advisor.
Some Electric Coops explicitly require an AHRI Certificate, and for New Mexico tax credits, you need “documentation from the supplier” verifying the required performance values of products.
You should also get an itemized receipt that breaks out equipment and labor costs as well as the installation cost of each component of a dual fuel system (e.g. gas furnace/heat pump). You will need this to file IRS Form 5695.
Also be aware that different tax credit and rebate programs may have different requirements. For example, NOT ALL of the heat pumps and heat pump water heaters obtained through PNM programs ALSO qualify for federal and state tax credits. Dual fuel systems do not qualify for NM tax credit.