New Mexico still pairs strong sun with a genuinely useful state tax credit
The Solar Market Development Tax Credit is refundable, which makes it unusually strong, but it is first-come, first-served
New Mexico's SMDTC, per the Energy, Minerals and Natural Resources Department's own program page, gives homeowners a state income tax credit equal to 10% of the total cost of purchasing and installing a solar photovoltaic or solar thermal system, capped at $6,000. Because the credit is refundable, confirmed directly in EMNRD's own FAQ, if it exceeds what you owe in state income tax, the New Mexico Taxation and Revenue Department sends you the difference directly rather than making you carry it forward across future tax years the way many state credits work. The credit applies to systems installed on or after March 1, 2020, and you must apply to EMNRD for a certificate of eligibility within one calendar year of installation. The legislature raised the annual statewide cap on credits EMNRD can certify from $12 million to $30 million in 2024, and applications are processed first-come, first-served against that cap, so a complete, promptly filed application matters. With the federal Residential Clean Energy Credit gone for 2026 installations, this state credit carries more relative weight than it used to.
Net metering is still full retail rate, but PNM wants to change that, and so does PNM's possible new owner
PNM, El Paso Electric, and Xcel Energy are all required to offer net metering to solar customers. Current programs generally credit exported solar at the full retail rate up to your monthly usage, with unused annual credits cashed out at a lower avoided cost rate rather than expiring. However, reporting from mid-2026 describes PNM convening stakeholders to propose eliminating credit banking and altering compensation for solar customers going forward, a change that solar industry advocates say could affect more than 50,000 existing New Mexico solar owners. As of this writing, the proposal has not been approved by the New Mexico Public Regulation Commission, so current terms remain in effect, but this is a live policy question rather than a settled one. Layered on top of that, Blackstone Infrastructure has a pending proposal to acquire PNM's parent company, TXNM Energy, a deal still under PRC review as of late 2026; no public change to net metering policy has been announced in connection with that acquisition, but it's a second reason this area is worth watching rather than assuming is settled. Anyone considering PNM territory solar should get written confirmation of current net metering terms before signing a contract. Compare the general landscape against a neighboring state using the Arizona incentive estimator.
Gross receipts tax exemption and no property tax increase round out the package
Solar equipment is exempt from New Mexico's gross receipts tax, the state's version of a sales tax, and this exemption applies automatically without a separate filing. On property tax, owned residential solar systems generally do not increase your home's assessed value under how the state treats physical improvements within its residential valuation limitation framework, though the treatment of third-party-owned systems like leases can differ, so clarify ownership structure with your installer if a property tax question is part of your decision. This exemption works alongside net metering rather than replacing it, so both are worth factoring into your overall estimate. The property tax exemption savings calculator can help you put a number on that second piece.
PNM customers can add a modest SREC income stream, and a battery credit isn't available yet
PNM's SREC purchase program pays residential and small commercial solar customers $0.0025 per kWh, a quarter of a cent, for every kilowatt-hour their system produces, for eight years from contract execution. It's a real but small addition on top of net metering and the state tax credit, and it's only available to PNM customers rather than statewide. On storage, a proposed 40% battery tax credit up to $6,000 died in the House Taxation and Revenue Committee during the 2025 legislative session and does not currently exist in New Mexico, though a similar bill could be reintroduced in a future session. The savings with battery vs without battery comparison can help you decide whether adding storage still makes sense without that credit.