State solar guide
New Mexico has strong solar fundamentals in 2026. The federal residential credit expired December 31, 2025, but state incentives and net-metering rules still support solid payback timelines for qualified homeowners.
Sources: ElectricChoice June 2026 | NREL PVWatts (Albuquerque averages 5.5 to 6.0 peak sun hours per day) | EnergySage May 2026 | Federal residential credit: Section 25D expired December 31, 2025, H.R.1 (One Big Beautiful Bill Act).
Net metering
New Mexico regulated investor-owned utilities are required to offer net metering at the retail rate for systems under 10 kW. PNM (Public Service Company of New Mexico) offers full 1:1 retail-rate credits that roll over month to month indefinitely with no expiration. El Paso Electric credits within the same month at the retail rate; any surplus remaining at month-end is credited at a lower purchased-power rate rather than the full retail rate. Municipal utilities and rural electric cooperatives may participate voluntarily with varying terms.
PNM's indefinite credit rollover is the strongest net metering feature in New Mexico - unused credits from winter production can be banked and drawn on during summer high-production periods. El Paso Electric customers should be aware that month-end surplus settles at a lower rate, making monthly production timing more important. Verify your specific utility's net metering tariff at time of installation.
Program: NM1_full_retail. Last verified: June 1, 2026. DSIRE source (opens in new tab).
Verify with your utility
Net-metering rules change by utility and program cycle. Confirm current export credit rates and eligibility with your specific New Mexico utility before contracting. Current program details at DSIRE (opens in new tab).
State incentive stack
The federal residential credit expired December 31, 2025. The programs below are what remains for New Mexico homeowners. Amounts and availability change; every program is date-stamped and linked to its DSIRE source.
Federal residential solar credit (Section 25D): expired. The Section 25D residential investment tax credit expired December 31, 2025. The residential credit rate is 0%. State and local incentives below may still significantly reduce your net system cost. Commercial systems still qualify for Section 48E (30%).
| Program | Benefit | Eligibility | Status | Source |
|---|---|---|---|---|
| New Mexico Solar Market Development Tax Credit (SMDTC) - Solar Only State income tax credit (refundable) Verify current program status and eligibility requirements with the New Mexico Taxation and Revenue Department or your tax advisor before finalizing a contract. Credit amounts and caps may be adjusted by legislation. | 10% of costs, maximum $6,000 per year 10% of the purchase and installation cost of a qualifying solar energy system, capped at $6,000 per year. The credit is refundable - you receive the full credit amount even if it exceeds your New Mexico income tax liability. | New Mexico residents purchasing and installing a qualifying solar energy system. Refundable - available regardless of tax liability. | Active | DSIRE (opens in new tab) |
| New Mexico Solar Market Development Tax Credit (SMDTC) - Solar Plus Battery State income tax credit (refundable) Battery must be at least 15 kWh usable capacity to qualify for the enhanced rate. Verify battery specifications and current program requirements with your contractor and the New Mexico Taxation and Revenue Department. | 20% of costs, maximum $12,000 per year (requires 15+ kWh battery) 20% of the purchase and installation cost of a qualifying solar energy system paired with battery storage of 15 kWh or more, capped at $12,000 per year. Refundable. Combined solar and storage systems receive this enhanced rate. | New Mexico residents purchasing and installing a qualifying solar energy system paired with battery storage of at least 15 kWh capacity. Refundable - available regardless of tax liability. | Active | DSIRE (opens in new tab) |
| New Mexico Gross Receipts Tax (GRT) Exemption for Solar Sales tax exemption (GRT) The battery storage GRT exemption applies through July 1, 2034. Verify with your contractor that the purchase is properly structured to qualify for the GRT exemption. | Saves approximately 5% to 8.813% of system cost depending on jurisdiction; typically $1,200 to $2,100 on a typical residential installation Solar equipment purchase and installation are exempt from New Mexico's Gross Receipts Tax. Battery storage paired with solar is also exempt through July 1, 2034 under an expansion effective July 1, 2024. | New Mexico residents purchasing qualifying solar energy systems. Battery storage paired with solar covered through July 1, 2034. | Active | DSIRE (opens in new tab) |
| New Mexico Residential Solar Property Tax Exemption Property tax exemption Confirm with your county assessor that the installation is properly recorded as exempt at the time of permit and inspection. | Full exclusion of solar-added assessed value from property taxes 100% exemption of the added property value from a solar installation from New Mexico property tax assessment. No expiration date currently set. | New Mexico residential properties with qualifying solar energy systems. | Active | DSIRE (opens in new tab) |
| New Mexico Solar Sales Tax Exemption Sales tax exemption Verify that your specific installation and municipality qualify for the New Mexico sales tax exemption. | State sales tax savings on system equipment and installation New Mexico exempts solar equipment purchase and installation from the state Gross Receipts Tax (GRT, the state equivalent of sales tax). GRT rates range from approximately 5% to 8.813% depending on jurisdiction, saving homeowners approximately $1,200 to $2,100 on a typical installation. Battery storage paired with solar is also covered through July 1, 2034 under an exemption expanded as of July 1, 2024. | New Mexico homeowners purchasing qualifying solar energy systems. | Threatened | DSIRE (opens in new tab) |
Data last verified June 1, 2026. Incentive programs change; verify current amounts and availability at dsireusa.org (opens in new tab) before committing to a project.
Battery storage incentives in New Mexico
Solar plus battery storage systems with 15 kWh or more of battery capacity qualify for the enhanced 20% New Mexico SMDTC credit, capped at $12,000 per year (versus 10%/$6,000 for solar only). This makes New Mexico one of the best-incentivized states for solar-plus-storage in the post-federal-credit environment.
Savings example
This example uses real New Mexico market data. No federal residential credit is applied. Figures are illustrative; your in-home assessment uses your actual utility bills and the current rate schedule for your specific utility.
System size 11 kW at market average of $2.76 per watt. Annual production estimated at 16,500 kWh based on Albuquerque at 5.5 to 6.0 peak sun hours per day (NREL PVWatts). Assumes 75% self-consumption at $0.1507 per kWh full retail value; 25% exported at full retail rate via PNM net metering. Utility rate escalation at 3% annually. Federal residential credit: $0 (expired). State credit: $3,036 refundable. GRT exemption estimated at approximately $1,700. Figures are illustrative; your in-home assessment will use your actual bills and current PNM rate schedule.
New Mexico PNM customer (illustrative)
Illustrative example. Federal residential credit: $0 (Section 25D expired December 31, 2025). Your estimate will use your actual utility bills and current rate schedule.
Permitting
New Mexico does not have a statewide residential solar permit fee cap. Permit fees vary by jurisdiction. Albuquerque (Bernalillo County) is the primary market and has an established solar permit process through the city Development Services Department. Typical permit fees in Albuquerque run $150 to $350 for residential solar systems. Utility interconnection with PNM typically adds 4 to 8 weeks after permit issuance. Total contract-to-energization time in New Mexico averages 8 to 14 weeks depending on utility and jurisdiction.
New Mexico's smaller market and fewer installers outside Albuquerque means some rural jurisdictions have longer permit review timelines. Santa Fe, Las Cruces, and Rio Rancho each have separate permit processes. SolarAPP+ adoption in New Mexico is limited; verify with your specific AHJ.
Commercial solar in New Mexico
The commercial solar credit (Section 48E, 30 percent) remains available for qualifying commercial projects. Construction must begin by July 4, 2026 to qualify for the full placed-in-service window. Combined with MACRS accelerated depreciation and 100 percent first-year bonus depreciation, the combined first-year federal benefit can reach 45 to 55 percent of project cost for many New Mexico business owners. Direct Pay is also available for nonprofits, municipalities, and other tax-exempt entities.
Commercial solar overviewCommercial solar projects must begin construction by July 4, 2026 to qualify for the 30 percent Section 48E federal tax credit. After that date, the system must be placed in service by December 31, 2027.
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