New Solar Market Development Tax Credit (NSMDTC)

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Program Overview

  • The New Mexico New Solar Market Development Tax Credit (NSMDTC) supports the installation of solar thermal or photovoltaic (PV) on residences, businesses, or agricultural enterprises in New Mexico.
  • The tax credit covers 10% of the equipment, materials, and labor costs of a solar energy system, up to $6,000 per taxpayer. Applications are reviewed on a first-come first served basis and once the $30m cap is met, no further credits are issued for that year.
  • The tax credit remains in effect and available for systems installed from 2025 through 2031. Each year has its own installation deadline on December 31 of the following year. If your system is installed in 2026, the application deadline is December 31, 2027.

Who is eligible?

If you have installed a qualifying solar thermal or PV system in the state of New Mexico, you are eligible to apply. This includes tribal lands.

What is offered?

  • A tax credit of up to $6,000 per taxpayer for a qualifying solar thermal or PV system and battery system.
  • Transferability: tax credits can be sold, exchanged or transferred. Use Form TRD-41417 to report the transfer.

How Can I Apply?

  1. Install a qualifying solar system
  2. Apply for certification with EMNRD, include:
    1. Proof of purchase and installation
    2. System specs and compliance documentation
  3. If approved, EMNRD issues a Certificate of Eligibility
  4. File your tax credit with the New Mexico Taxation and Revenue Department (instructions included under “How to Claim” below).
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*Contact ECAM for instructions on how to claim costs related to a solar thermal system.

Required Documents

An application for New Solar Market Development Tax Credit must contain the following information as attachments:

  1. A current property tax bill or other equivalent proof of ownership in the applicant’s name for the residence, business, or agricultural enterprise where the solar energy system is installed. If there are multiple owners of the property, a joint application must be submitted.
  2. The equipment, materials, and labor costs of a solar energy system, documented by an itemized invoice.
  3. Building Code Inspection report that includes the building code authority’s permit number and date of successful passing inspection. Applicants may submit a physical form, or photo of inspection sticker, or a web-based report.
  4. A copy of the solar energy system’s design schematic and technical specifications:
    1. Site plan, which is a bird’s eye view of solar system design.
    2. One-line or three-line electrical wiring connection.

How to Claim

Once you have received your Certificate of Eligibility from the Energy, Minerals and Natural Resource Department (EMNRD) you will claim your New Solar Market Development Tax Credit with the New Mexico Taxation and Revenue Department.

  1. Start with your Certificate of Eligibility from the EMNRD. This document confirms you’re approved to claim the tax credit.
  2. Complete Form TRD-41406 and attach it to your tax return. This is the official claim form for the tax credit.
  3. If your credit exceeds your tax liability, you may receive a refund of that amount. The total amount claimed cannot exceed the original credit awarded.

You can file electronically via the Taxpayer Access Point.

The New Solar Market Development Tax Credit is transferable. The credit can be sold, exchanged, or otherwise transferred to another taxpayer for the full value of the credit. However, only credits issued for solar systems installed starting January 1, 2022 can be transferred.

FAQs: New Solar Market Development Tax Credit

1. What is the New Solar Market Development Tax Credit?

1. The New Mexico New Solar Market Development Tax Credit (NSMDTC) offers a state tax credit incentive against New Mexico income tax for the purchase and installation of an operating solar system on residences, businesses, and agricultural enterprises in New Mexico.

2. Requires certification from the Energy, Minerals and Natural Resources Department (EMNRD) before you can claim it on your state income tax return.

  3. 3. The tax credit provides up to 10% of the cost of purchase and installation of a solar thermal or photovoltaic system. However, this tax credit is subject to certain limitations and cannot exceed $6,000 per taxpayer per taxable year.
2. Who is eligible to receive the tax credit?

A taxpayer who has purchased and installed a solar thermal or solar photovoltaic system, as long as:

  1. The taxpayer is not a dependent of another individual.
  2. Purchase and install a solar thermal or solar photovoltaic system on property they own in New Mexico.
  3. The taxpayer must apply for the certification with EMNRD within one calendar year after installation.
    3. What documents do I need to apply for New Solar Market Development Tax Credit?

    To apply for the New Solar Market Development Tax Credit, you must submit an application on EMNRD’s online application portal. Please list all names, partnerships and titles listed as property owners on the application.

    A complete application must include the following documents uploaded as attachments:

    1. A current property tax bill or other equivalent proof of ownership in the applicant’s name for the residence, business, or agricultural enterprise where the solar energy system is installed.
    2. A Building Code Inspection report that includes the name of the building code authority, permit number, and date of successful inspection. This information must be noted on a physical form, a photo of the inspection sticker, or a web-based report.
    3. An invoice that itemizes the cost of materials and labor cost for installing the solar energy system.
    4. The solar energy system’s design schematic (site plan) and technical specifications (one- or three-line diagram).
    4. Didn’t the legislature recently make changes to the solar tax credit?

    Yes. During the 2024 legislative session, the legislature made two important changes to the tax credit.

    1. The legislature increased the cap on solar systems that EMNRD can certify from $12 million to $30 million.
    2. The legislature clarified that taxpayers living on tribal land and holding land in leasehold from a federally recognized tribe are also eligible for the credit.

    The legislature also created a special supplemental credit for individuals who installed their systems in years 2020-2023 but were unable to receive tax credit because the annual cap had already been reached. This provision has since sunset and is no longer available.

    5. When are the tax credits available?

    A New Mexico resident who installed a solar system is eligible for a state tax credit, and EMNRD is now processing applications. The applicant must apply for certification with EMNRD within one calendar year after year of installation.

    6. How will I know if my application is approved?
    1. You will receive notification from a system generated email. EMNRD will email a certificate of eligibility to the email address listed on application.
    2. The certificate will specify the amount of the tax credit eligible and the taxable year in which the credit may be claimed.
    3. Once you have received the certificate of eligibility, you can claim the tax credit on your income tax return for the taxable year in which you purchased and installed the solar system.
    7. What happens if my application is rejected?
    1. You will receive notification from a system generated email notifying you the reasons for rejection.
    2. The application is incomplete – you are missing a required document.
    3. You can correct any errors and resubmit a new application. EMNRD processes applications first come, first served, and that process begins only with a complete application.
    8. This credit can give me a tax credit up to $6000. What if I don’t owe this much in taxes?

    This tax credit incentive is a refundable tax credit, which means any amount above what you owe in tax liability will be refunded to you by the New Mexico Taxation and Revenue Department.

    9. My solar contractor hasn’t responded or has gone out of business. What do I do?

    It may be possible for you to still receive tax credit incentive. If applicants can obtain all required documents, they may apply for tax credit incentive.

    10. What if my solar contractor is nonresponsive?

    If you wish to file a complaint against a New Mexico business, you may do so with the New Mexico Department of Justice https://nmdoj.gov/get-help/submit-a-complaint/

    11. I need assistance, where can I get answers for further questions?

    For more information, please visit our New Solar Market Development Tax Credit webpage:

    Solar Market Development Tax Credit (SMDTC) – Energy Conservation and Management (nm.gov)

    The rule governing the tax credit incentive is available, and a guide is available to answer many questions including a step-by-step  guide on how to apply.

    For further questions please email our main office email: emnrd-ecam@emnrd.nm.gov

     

     

    Additional Guidance

    Form TRD-41406
    Download User Guide for New Solar Market Development Tax Credit
    Download Rule 3.3.14 NMAC, New Solar Market Development Tax Credit