New Mexico

The New Mexico Solar Market Development Tax Credit (SMDTC) is a state tax credit that helps homeowners, businesses, and agricultural enterprises reduce the cost of installing solar energy systems. This incentive provides up to 10% of your total solar system costs as a tax credit, with a maximum benefit of $6,000. The credit covers equipment, materials, and labor costs for qualifying solar installations.

To be eligible, you must own the property where the solar system is installed (or hold it in leasehold for tribal lands), and the system must be operating or substantially complete with proper building code inspection approval. You’ll need to apply through the New Mexico Energy, Minerals and Natural Resources Department (EMNRD) with required documentation including proof of ownership, building inspection reports, itemized invoices, and system technical specifications.

There’s also a special supplemental credit available for systems installed between 2020-2023 that were previously denied due to funding caps – but you must apply by December 31, 2025. The application process typically takes 3-4 weeks, and once approved, you’ll receive a certificate of eligibility to use when filing your state tax return with the New Mexico Taxation and Revenue Department.

New Mexico’s Property Tax Exemption for solar energy systems allows property owners to have their solar equipment valued at zero dollars for property tax purposes. This means you won’t pay property taxes on the value of your solar installation, which can save you money each year. The exemption applies to both solar-thermal and solar-electric systems, including photovoltaic panels and related equipment.

To qualify for this exemption, your solar system must be installed on residential property and include standard solar equipment like photovoltaic panels. The system must be used for business purposes, which includes rental properties. While the document focuses heavily on multifamily rental properties, the exemption appears to apply broadly to residential solar installations. The property tax portion of this legislation becomes effective for property valuations made on or after January 1, 2026, so systems installed after this date will benefit from the zero-dollar valuation for tax purposes.

Net metering in New Mexico allows homeowners with solar panels to receive credit for excess electricity they generate and send back to the utility grid. When your solar system produces more power than your home uses, that extra energy flows to the grid and creates credits on your electric bill. These credits can then offset the electricity you use from the grid when your solar panels aren’t producing enough power, like at night or during cloudy days.

The financial benefits vary significantly depending on your utility company. Public Service Company of New Mexico (PNM) offers the most favorable terms with 1:1 net metering, meaning you receive full retail credit for excess power that carries over month to month. However, El Paso Electric and Xcel Energy in New Mexico only provide 1:1 credits for power used within the same month. Any excess beyond monthly consumption receives much lower compensation – typically 2-11 cents per kWh for El Paso Electric and 1-3 cents per kWh for Xcel Energy, compared to retail rates of around 12-15 cents per kWh.

Net metering is generally available to residential customers who install qualifying solar systems, though specific size limits and technical requirements vary by utility. There are no current deadlines threatening this program, but the compensation structure differs greatly between utilities. Homeowners should carefully consider their utility provider when evaluating solar, as PNM customers will see significantly better financial returns than those served by El Paso Electric or Xcel Energy due to the more generous credit structure.