Solar Incentives in New Mexico
New Mexico homeowners installing solar in 2026 have access to several active state-level incentives. The New Mexico Solar Market Development Tax Credit (SMDTC), administered through EMNRD and the Taxation and Revenue Department, provides a state income tax credit worth up to 10% of equipment, materials, and labor costs, capped at $6,000, for the tax year of installation. The Sustainable Building Tax Credit offers additional state tax credit options for qualifying energy-conserving improvements, with amounts that vary by project type. A gross receipts tax deduction effectively removes the state's sales-like tax from the purchase and installation of qualifying solar energy systems. Homeowners also benefit from a property-tax protection that excludes solar installations from triggering reassessment above the residential valuation cap. For ongoing bill savings, New Mexico's net metering rule (17.9.570 NMAC) requires jurisdictional utilities to credit excess generation at the utility's applicable energy rate, which varies by utility tariff. Separately, the Community Solar Program allows customers of investor-owned utilities to receive bill credits by subscribing to a shared facility, at commission-calculated rates that likewise vary by utility and customer class.
On the federal side, the residential Clean Energy Credit under §25D — commonly called the 30% federal solar credit — expired for systems placed in service after December 31, 2025, under the One Big Beautiful Budget Act (Pub. L. 119-21). New residential installations completed in 2026 do not qualify for that credit. Its absence meaningfully extends payback periods compared to prior years, making the remaining state incentives more significant to the overall financial picture.
With residential electricity averaging approximately 14.81 cents per kilowatt-hour as of March 2026, the combination of active state credits, the sales-tax deduction, and property-tax protection can still reduce upfront and long-term costs, though individual payback timelines depend on system size, utility rates, and applicable tariffs.
Figures here are verified as of June 2026 against official New Mexico and federal sources; programs, credit caps, and utility rate cases change regularly, and the New Mexico Energy, Minerals and Natural Resources Department (energy.nm.gov) and the New Mexico Public Regulation Commission are the authoritative sources for current program status.
Federal credit update. The federal residential Clean Energy Credit (the 30% “solar tax credit” under §25D) expired for systems placed in service after December 31, 2025. New 2026 residential installs do not qualify; a 2025 install can still be claimed on a 2025 return (IRS Form 5695). What this means for 2026 →
Current solar incentives in New Mexico
New Solar Market Development Tax Credit (SMDTC)
New Mexico offers a state income tax credit for solar energy systems certified by the Energy, Minerals and Natural Resources Department (EMNRD). The credit is worth up to 10% of the equipment, materials, and labor costs of the system, capped at $6,000, for the tax year in which the system is installed. Applicants first obtain a certificate of eligibility from EMNRD, then claim the credit with the Taxation and Revenue Department.
| Amount | Up to 10% of equipment, materials, and labor costs of the solar energy system, not to exceed $6,000. |
|---|---|
| Who qualifies | New Mexico taxpayers who own (or, on land of a federally recognized Indian nation, tribe, or pueblo, hold in leasehold) an operating or substantially complete solar energy system certified by EMNRD; net cost excludes disallowed costs per 3.3.14.14(C) NMAC. |
| Administered by | New Mexico Energy, Minerals and Natural Resources Department (certification); New Mexico Taxation and Revenue Department (credit claim) |
Source: program page; 3.3.14 NMAC Official source →
Sustainable Building Tax Credit (SBTC)
The Sustainable Building Tax Credit incentivizes sustainable building practices and energy-efficient products. Two credit types are available: one for installing certain energy-conserving products in existing residences, and another for residential or commercial new construction and commercial renovation projects. The credits are available to New Mexico taxpayers filing either personal income or corporate tax returns. This is a green-building credit rather than a solar-equipment credit, but solar-ready and high-efficiency homes are within its scope.
| Amount | Varies by credit type and project; amounts are not stated on the program overview page — applicants apply through EMNRD's online portals for each credit type. |
|---|---|
| Who qualifies | New Mexico personal income or corporate taxpayers installing qualifying energy-conserving products in existing residences, or completing qualifying new construction or commercial renovation projects. |
| Administered by | New Mexico Energy, Minerals and Natural Resources Department; New Mexico Taxation and Revenue Department |
Source: program page Official source →
Solar Energy Systems Gross Receipts Tax Deduction
Receipts from the sale and installation of solar energy systems are deductible from New Mexico gross receipts tax, which functions like a sales tax exemption for buyers. Qualifying systems provide space heat, hot water, or electricity to the property where installed, and include solar panel installations (panels that are not also windows), dark-colored water tanks exposed to sunlight, and non-vented trombe walls, with all necessary equipment. The seller must obtain a written statement (Form RPD-41341) that purchases are exclusively for installing or operating the solar energy system.
| Amount | 100% deduction of qualifying receipts from gross receipts tax. |
|---|---|
| Who qualifies | Sellers/installers of qualifying solar energy systems in New Mexico; written purchase-and-use statement (Form RPD-41341) required. |
| Administered by | New Mexico Taxation and Revenue Department |
Source: NMSA 1978 sec. 7-9-112; TRD publication FYI-105 Official source →
Residential Property Valuation Protection for Solar Energy System Installations
New Mexico's cap on annual increases in residential property valuation does not lift for solar energy system installations: physical improvements made to a home normally allow reassessment above the cap, but the statute expressly excepts solar energy system installations. In practice, installing a qualifying solar system (solar panels that are not also windows, a dark-colored water tank exposed to sunlight, or a non-vented trombe wall providing space heat, hot water, or electricity to the property) does not raise the home's taxable valuation.
| Amount | Solar energy system installations are excluded from the physical-improvement exception to the residential valuation cap, so they do not increase assessed value. |
|---|---|
| Who qualifies | Owners of residential property in New Mexico with a qualifying solar energy system installation as defined in NMSA 1978 sec. 7-36-21.2. |
| Administered by | County assessors; New Mexico Taxation and Revenue Department, Property Tax Division |
Source: NMSA 1978 sec. 7-36-21.2 (statutory text as reproduced in legislature bill print) Official source →
Net Metering for Customer-Sited Qualifying Facilities
New Mexico Public Regulation Commission rule 17.9.570 NMAC requires jurisdictional utilities to offer metering and billing arrangements for customer-sited qualifying facilities. Systems up to and including 10 kW use simplified net metering tariffs, with credits for excess kilowatt-hours paid at the utility's energy rate; systems over 10 kW up to 10 MW use a standard metering and billing agreement. Net amounts owed to the customer under $50 carry over to the next billing period, and amounts of $50 or more must be paid out by the utility.
| Amount | Excess generation credited or paid at the utility's applicable energy rate (varies by utility tariff); customer credits of $50 or more paid out, smaller amounts carried forward. |
|---|---|
| Who qualifies | Customers of NMPRC-jurisdictional utilities with interconnected qualifying facilities up to 10 MW; simplified procedures apply at or below 10 kW design capacity. |
| Administered by | New Mexico Public Regulation Commission |
Source: 17.9.570 NMAC (esp. 17.9.570.14-.15) Official source →
Community Solar Program
Under the Community Solar Act and NMPRC rule 17.9.573 NMAC (effective July 12, 2022, amended October 22, 2024), customers of New Mexico investor-owned utilities — and cooperatives that opt in — can subscribe to shared community solar facilities and receive monthly bill credits for their share of the output. The bill credit rate is calculated from the total aggregate retail rate by customer class, less commission-approved distribution cost components. The rule includes subscriber protections, required subscriber-agreement terms, and scoring preferences for projects serving low-income subscribers.
| Amount | Monthly bill credits at the commission-calculated community solar bill credit rate (varies by utility and customer class; see 17.9.573.20 NMAC). |
|---|---|
| Who qualifies | Customers of NMPRC-jurisdictional investor-owned electric utilities and opt-in rural electric cooperatives who subscribe to an approved community solar facility. |
| Administered by | New Mexico Public Regulation Commission |
Source: 17.9.573 NMAC; Community Solar Act, NMSA 1978 sec. 62-16B-1 et seq. Official source →
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Programs verified as of June 2026 against official state and federal sources (each cited above); refreshed quarterly as legislatures and utility rate cases change the rules. How we verify this data. This page is informational only — not tax or legal advice.