SOLAR MARKET INCOME TAX CREDIT

SB0055

SENATE BILL 55

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Mimi Stewart
and
Reena Szczepanski

and
Micaelita Debbie O’Malley
and
Elizabeth "Liz" Stefanics

and
Nicole Tobiassen

AN ACT

RELATING TO TAXATION; INCREASING THE AMOUNT OF THE NEW SOLAR
MARKET DEVELOPMENT INCOME TAX CREDIT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
Section 7-2-18.31 NMSA 1978 (being Laws 2020,
Chapter 13, Section 1, as amended) is amended to read:

"7-2-18.31. NEW SOLAR MARKET DEVELOPMENT INCOME TAX
CREDIT.--

A. For taxable years ending prior to January 1,
2032, a taxpayer who is not a dependent of another individual
and who, on or after March 1, [
2020
]
2026
, purchases and
installs a solar thermal system or a photovoltaic system in a
residence, business or agricultural enterprise in New Mexico
owned by that taxpayer or by a federally recognized Indian
nation, tribe or pueblo and held in leasehold by that taxpayer
may claim, and the department may allow, a credit against the
taxpayer's tax liability imposed pursuant to the Income Tax Act
in an amount provided in Subsection C of this section. The tax
credit provided by this section may be referred to as the "new
solar market development income tax credit".

B. The purpose of the new solar market development
income tax credit is to encourage the installation of solar
thermal and photovoltaic systems in residences, businesses and
agricultural enterprises.

C. The department may allow a new solar market
development income tax credit of [
ten
]
thirty
percent of the
purchase and installation costs of a solar thermal or
photovoltaic system.

D. The new solar market development income tax
credit shall not exceed [
six thousand dollars ($6,000)
]
fifteen
thousand dollars ($15,000)
per taxpayer per taxable year. The
department shall allow a tax credit only for solar thermal and
photovoltaic systems certified pursuant to Subsection E of this
section.

E. Subject to the limitation provided in Subsection
F of this section, a taxpayer shall apply for certification of
eligibility for the new solar market development income tax
credit from the energy, minerals and natural resources
department on forms and in the manner prescribed by that
department. Completed applications shall be considered in the
order received. The application shall include proof of
purchase and installation of a solar thermal or photovoltaic
system, that the system meets technical specifications and
requirements relating to safety, code and standards compliance,
solar collector orientation and sun exposure, minimum system
sizes, system applications and lists of eligible components and
any additional information that the energy, minerals and
natural resources department may require to determine
eligibility for the credit. A dated certificate of eligibility
shall be issued to the taxpayer providing the amount of the new
solar market development income tax credit for which the
taxpayer is eligible and the taxable year in which the credit
may be claimed. A certificate of eligibility for a new solar
market development income tax credit may be sold, exchanged or
otherwise transferred to another taxpayer for the full value of
the credit. The parties to such a transaction shall notify the
department of the sale, exchange or transfer within ten days of
the sale, exchange or transfer. The energy, minerals and
natural resources department shall provide the department
appropriate information for all certificates of eligibility in
a secure manner on regular intervals agreed upon by both
departments.

F. The
annual
aggregate amount of credits that may
be certified pursuant to Subsection E of this section
in a
calendar year
is [
as follows
]
thirty million dollars
($30,000,000)
, and applications for certification received
after [
these limitations have
]
this limitation has
been met
shall not be approved.

[
(1) for calendar years 2020 through 2023,
twelve million dollars ($12,000,000) for each calendar year;
provided that if this limitation has been met for any of those
calendar years, an additional total of twenty million dollars
($20,000,000) in credits may be certified for all of those
calendar years; and provided further that credits certified
pursuant to this paragraph shall be claimed only for taxable
year 2023; and

(2) for calendar years 2024 and thereafter,
thirty million dollars ($30,000,000) for each calendar year.
]

G. A taxpayer may claim a new solar market
development income tax credit for the taxable year in which the
taxpayer purchases and installs a solar thermal or photovoltaic
system. To receive a new solar market development income tax
credit, a taxpayer shall claim the credit on forms and in the
manner prescribed by the department within twelve months
following the calendar year in which the system was installed
[
provided that, for a taxpayer who receives a certificate of
eligibility pursuant to Paragraph (1) of Subsection F of this
section, the taxpayer shall apply to the department within
twelve months following the calendar year in which the
certification is made
]. The claim shall include a
certification made pursuant to Subsection E of this section.

H. That portion of a new solar market development
income tax credit that exceeds a taxpayer's tax liability in
the taxable year in which the credit is claimed shall be
refunded to the taxpayer.

I. Married individuals filing separate returns for
a taxable year for which they could have filed a joint return
may each claim only one-half of the new solar market
development income tax credit that would have been claimed on a
joint return.

J. A taxpayer may be allocated the right to claim a
new solar market development income tax credit in proportion to
the taxpayer's ownership interest if the taxpayer owns an
interest in a business entity that is taxed for federal income
tax purposes as a partnership or limited liability company and
that business entity has met all of the requirements to be
eligible for the credit. The total credit claimed by all
members of the partnership or limited liability company shall
not exceed the allowable credit pursuant to this section.

K. A taxpayer allowed a tax credit pursuant to this
section shall claim the credit on forms and in a manner
required by the department.

L. The tax credit provided by this section shall be
included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the annual aggregate cost of the
tax credit.

M. As used in this section:

(1) "photovoltaic system" means an energy
system that collects or absorbs sunlight for conversion into
electricity; and

(2) "solar thermal system" means an energy
system that collects or absorbs solar energy for conversion
into heat for the purposes of space heating, space cooling or
water heating."

SECTION 2.
APPLICABILITY.--The provisions of this act
apply to taxable years beginning on or after January 1, 2026.

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