New Mexico Solar Panels

New Mexico’s Solar Market Development Tax Credit (NSMDTC) offers individual taxpayers, corporations, and agricultural enterprises a refundable state income tax credit equal to 10% of the equipment, materials, and labor costs of a certified solar energy system, up to a maximum of $6,000. Because the credit is refundable, if the credit amount exceeds your state tax liability, the difference is paid back to you as a refund by the New Mexico Taxation and Revenue Department.

To be eligible, you must have purchased and installed a solar thermal or photovoltaic system on property you own (or hold in leasehold for federally recognized tribal members) on or after March 1, 2020, and no later than December 31, 2031. The annual statewide funding pool is capped at $30 million per calendar year and certificates are issued on a first-come, first-served basis, so applying early in the year is strongly recommended.

The application process involves five steps: install your system, gather required documents from your contractor (including an itemized invoice and building inspection report), apply to the Energy, Minerals and Natural Resources Department (EMNRD) for a certificate of eligibility, receive your certificate, and then claim the credit when filing your New Mexico state taxes. Applications must be submitted by December 31 of the year following your installation — for example, a 2025 installation must be applied for by December 31, 2026. Allow 3–4 weeks for processing.

New Mexico’s Solar Property Tax Exemption ensures that adding a solar energy system to your home will not increase your property tax bill. Solar installations are assessed at a value of zero dollars for property tax purposes, meaning the added value of your solar panels is completely excluded from your home’s taxable assessed value.

For residential rental properties, the zero-dollar valuation applies starting with property tax assessments made on or after January 1, 2026, so homeowners and landlords who installed solar in recent years will begin seeing this benefit reflected in their 2026 tax assessments. This exemption applies to both solar photovoltaic (PV) and solar thermal systems used to provide electricity, space heat, or hot water.

This benefit is generally automatic — your local county assessor is required to exclude the value of qualifying solar equipment from your property’s assessed value. No separate application is typically required, but it is a good idea to confirm with your local assessor’s office that your system has been properly excluded from your assessment.

New Mexico provides a gross receipts tax (the state’s equivalent of a sales tax) exemption on the purchase and installation of solar energy systems. Under NMSA 1978, § 7-9-112, receipts from the sale and installation of solar energy systems — including equipment and labor — are fully deductible from gross receipts, meaning you pay no state sales tax on your solar installation. Given New Mexico’s gross receipts tax rate of between 5% and 8.813%, this can save homeowners between approximately $1,200 and $2,100 on an average-sized system.

This exemption applies to solar systems that use the resulting electricity, space heat, or hot water on the buyer’s property. The benefit is automatic and is reflected in your final purchase price — your solar installer is responsible for not charging gross receipts tax on qualifying equipment and installation services, so no separate application is needed on your part.

Importantly, as of July 1, 2024, the Legislature expanded this deduction to also cover energy storage equipment and related equipment used to store energy generated from solar or wind for future distribution. This expanded storage exemption is in effect through July 1, 2034, making battery storage systems paired with solar also eligible for the gross receipts tax exemption.

New Mexico state policy requires regulated investor-owned utilities (IOUs) to offer net metering to customers with solar and other qualifying renewable energy systems. Net metering allows you to send excess electricity your solar panels generate back to the grid and receive bill credits in return. When your panels produce more than you use, your meter effectively runs backward, and those credits offset electricity you draw from the grid when your panels aren’t producing enough — such as at night or on cloudy days. There is no statewide cap on the aggregate capacity of net-metered systems, and the program is available for qualifying systems up to 80 MW.

Credit rates and rollover policies vary by utility: PNM customers receive a full 1:1 retail-rate credit for every kWh sent to the grid, and credits roll over month to month indefinitely. El Paso Electric customers also receive 1:1 credits within the same month, but any surplus remaining at month’s end is credited at a lower purchased power rate (historically 2–11 cents per kWh). Xcel Energy (SPS) customers receive 1:1 credits monthly, with excess credits valued at the FPPCAC rate (typically 1–3 cents per kWh); if accumulated credits reach $50 or more, a check is issued at the end of the billing period.

While municipal utilities and electric cooperatives are not required by state law to offer net metering, many do so voluntarily. Contact your specific utility to confirm the exact net metering terms, interconnection requirements, and any applicable system size limits that apply to your account.

Public Service Company of New Mexico (PNM) offers a Solar Renewable Energy Credit (SREC) purchase program for residential and small commercial solar customers. For every kilowatt-hour (kWh) of solar electricity your system produces, you earn one SREC. PNM will purchase those SRECs from you at a rate of $0.0025 (one-quarter cent) per kWh for a period of eight years from the date your contract is executed. Since PNM’s program began in 2007, the utility has paid approximately $44.6 million to solar customers through this program.

To participate, you must apply directly through PNM. There is an application fee of $150 if you choose to sell your SRECs to PNM, or a reduced fee of $50 if you prefer to retain your SRECs and track them yourself using the Western Renewable Energy Generation Information System (WREGIS) platform. Payouts are issued once your accumulated credits exceed $20.

It is important to note that this program is only available to PNM customers — SRECs are not available statewide in New Mexico. Additionally, PNM does not partner with third-party solar companies to provide incentives, discounts, or rebates, so be cautious of any solar company claiming a special PNM partnership. Always verify program details and enrollment directly with PNM.

New Mexico’s Community Solar program enables households, small businesses, and non-profits to benefit from solar energy without installing panels on their own property. Subscribers sign up for a share of a larger, off-site solar facility located within their utility’s service territory. The electricity generated by their subscribed share is credited directly to their utility bill, resulting in ongoing savings — participating subscribers can expect approximately 10% savings on their electricity bills.

The program is available to customers of PNM, El Paso Electric, and Xcel Energy (SPS). There are no upfront costs and no equipment to install, making it an ideal option for renters, apartment dwellers, or homeowners whose roofs are not suitable for solar panels. Each community solar project is required to reserve at least 30% of its capacity for low-income subscribers, ensuring equitable access to solar savings.

The first community solar projects broke ground in Winter 2025, with electricity from these facilities expected to begin flowing into the grid by Summer/Fall 2025. If you are interested in subscribing, contact your utility or visit the Coalition for Community Solar Access New Mexico page for the latest information on available projects and how to sign up.

New Mexico was awarded a $156 million Solar for All grant from the U.S. Environmental Protection Agency (EPA) in April 2024. The program is administered by the New Mexico Energy, Minerals and Natural Resources Department (EMNRD) and is specifically designed to make solar energy accessible to low-income households that might otherwise be unable to afford it. Program components are expected to include funding for rooftop solar on single-family homes as well as community solar projects that allow renters and multifamily residents to participate.

To be eligible, households must have incomes at or below 80% of the area median income (AMI), or demonstrate eligibility through participation in federal assistance programs such as SNAP (food stamps) or LIHEAP. Renters and apartment dwellers are also eligible to participate through the community solar component of the program, removing the barrier of needing to own a home with a suitable roof.

Important status note: The Trump Administration moved to cancel this program in 2025, but the State of New Mexico and other states are actively pursuing legal action to restore the funding. EMNRD originally anticipated the first solar installations under this program by 2026, with the application process launching in late 2025. Prospective applicants should monitor EMNRD’s official website for the latest updates on program availability and enrollment.