New Mexico Solar Panels

New Mexico’s New Solar Market Development Tax Credit (NSMDTC) provides a 10% tax credit on the total cost of equipment, materials, and labor for a qualifying solar energy system, up to a maximum of $6,000 per year. The credit is available to individual taxpayers, corporations, and agricultural enterprises who purchase and install a solar photovoltaic or solar thermal system on property they own. The program is funded at $30 million annually (increased from $12 million by SB 121 in 2024) and certificates are issued on a first-come, first-served basis, so applying promptly after installation is strongly recommended.

One of the most valuable features of this credit is that it is fully refundable — if the credit amount exceeds your New Mexico state tax liability, the Taxation and Revenue Department will refund the difference directly to you. You do not need a large tax bill to benefit from the full $6,000. Any unused portion of the credit can also be carried forward for up to five consecutive tax years.

To claim the credit, you must first apply through the Energy, Minerals and Natural Resources Department (EMNRD) to receive a certificate of eligibility, then file the credit with the New Mexico Taxation and Revenue Department. Processing typically takes 3–4 weeks. Applications must be submitted within one year of the taxable year of installation, or until annual funds are exhausted. The program is currently authorized through 2031.

New Mexico’s gross receipts tax (GRT) — the state’s equivalent of a sales tax — does not apply to the purchase and installation of qualifying solar energy systems. Depending on your local tax jurisdiction, the GRT rate ranges from approximately 5% to 8.813%, meaning this exemption can save homeowners between $1,200 and $2,100 on a typical residential solar installation. The exemption applies automatically at the point of sale — your installer will not charge GRT on qualifying equipment or labor, so no action is required on your part.

As of July 1, 2024, the Legislature expanded this exemption to also cover energy storage equipment (battery storage) used to store energy generated from solar or wind sources. This battery storage exemption is in effect through July 1, 2034, making paired solar-plus-storage systems fully eligible for the GRT exemption. This is currently the only active state-level incentive specifically targeting battery storage in New Mexico.

The exemption is governed under NMSA 1978 § 7-9-112. Because the benefit is applied directly by your installer at the time of purchase, there is no separate application process for homeowners. Simply ensure your installer is aware of and applying the exemption when providing your final contract and invoice.

New Mexico offers a permanent property tax exemption for solar energy systems installed on residential properties. When your county assessor evaluates your home’s value, the value added by a solar installation is excluded from the assessment used to calculate your property taxes. This means that even though solar panels can increase your home’s market value, you will not pay higher property taxes as a result of installing them.

The financial benefit is ongoing and permanent for as long as you own the system. On a typical residential solar installation that adds approximately $20,000 in home value, and with New Mexico property tax rates generally ranging from 1% to 1.5%, homeowners can expect to save roughly $200–$300 per year in property taxes they would otherwise owe.

No special application is required to receive this exemption — it is applied automatically by your county assessor. This exemption stacks with New Mexico’s other solar incentives, such as the state tax credit and gross receipts tax exemption, making it an important part of the overall financial picture for going solar in New Mexico.

New Mexico state policy requires all regulated investor-owned utilities (IOUs) — including PNM, El Paso Electric, and Xcel Energy (SPS) — to offer net metering to customers with solar energy systems. Under net metering, when your solar panels produce more electricity than your home uses, the excess is sent to the grid and you receive a credit on your utility bill. When your panels aren’t producing enough (e.g., at night), you draw from the grid and those credits offset what you owe. There is no statewide cap on aggregate net-metered capacity, and the program is available for qualifying systems up to 80 MW.

Credit rates and rollover policies vary by utility. PNM customers receive full 1:1 retail-rate credits that roll over month to month indefinitely. El Paso Electric customers receive retail-rate credits within the same month, with any surplus at month’s end credited at a lower purchased power rate. Xcel Energy (SPS) customers receive 1:1 monthly credits, with excess credits valued at the FPPCAC rate; accumulated credits of $50 or more are issued as a check. Many rural electric cooperatives in New Mexico also offer net metering — contact your specific cooperative (such as Socorro Electric, Jemez Mountains Electric, or Continental Divide Electric) for their terms.

Net metering is one of the most impactful solar incentives available, as it can dramatically reduce or even eliminate your monthly electricity bill. To participate, your solar system must be interconnected with your utility’s grid. Contact your utility directly to initiate the interconnection and net metering agreement process before or during your solar installation.

Public Service Company of New Mexico (PNM) offers a performance-based Solar Renewable Energy Credit (SREC) purchase program for residential and small commercial solar customers. For every kilowatt-hour (kWh) of electricity your solar 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. Payouts are issued once your accumulated credits exceed $20.

To enroll, there is an application fee of $150 if you choose to sell your SRECs directly to PNM, or a reduced fee of $50 if you prefer to retain your SRECs and track them yourself through the Western Renewable Energy Generation Information System (WREGIS) platform. While the per-kWh rate is modest, the program provides a guaranteed, long-term revenue stream on top of your net metering credits.

This program is exclusively available to PNM customers — it is not a statewide program. New Mexico does not have a state SREC mandate, so outside of PNM’s program, any voluntary SREC market activity should be treated as supplemental income rather than a reliable financial benefit. Contact PNM directly to enroll after your solar system is installed and interconnected.

The New Mexico Community Solar Program, established by the Community Solar Act (SB 84) signed in April 2021, allows residential and small commercial customers of PNM, El Paso Electric, and Xcel Energy (SPS) to subscribe to a portion of a larger, off-site solar facility. The electricity generated by your subscribed share is credited directly to your monthly utility bill, providing ongoing savings without the need to own a roof or install any equipment. Subscribers can expect approximately 5–15% savings on their electricity bills. The program has a total statewide capacity cap of 500 MW.

The program is open to all income levels, with no upfront costs and no roof required — making it an excellent option for renters and apartment dwellers. Each community solar project is required to reserve a significant portion of its capacity for low-income subscribers. Income-qualified households (those at or below 80% of Area Median Income, or enrolled in programs like SNAP or LIHEAP) may be eligible for deeper savings of 15–28% annually. As of 2025, seven projects have been energized, with approximately 47 total projects anticipated by end of 2026.

To participate, check availability in your utility’s service territory and sign up through the program’s official channels. The New Mexico Public Regulation Commission (PRC) oversees the program, and rulemaking updates were underway in early 2026. Visit the PRC’s community solar page or contact the program administrator at [email protected] or (877) 794-0109 for current availability and enrollment information.