Gross receipts tax, in one paragraph
New Mexico does not levy a sales tax. It levies gross receipts tax on the seller: a business owes tax on the receipts it takes in from doing business in the state. Almost every seller passes that cost through as a line on the invoice, which is why it looks and feels like sales tax from the buyer’s side of the table. The rate depends on where the job happens — a state portion plus local increments that differ by county and municipality, and that get revised on a schedule. We do not publish a rate on this page, because a rate printed in an article is wrong sooner than you think. Look up the current rate for your job location, or ask your contractor to show you which location code they are reporting under.
What § 7-9-112 actually does
NMSA 1978 § 7-9-112 provides a deduction from gross receipts for the sale and installation of solar energy systems. The mechanism matters more than most buyers realize: it is a deduction the seller takes on its own gross receipts return, not a rebate you apply for and not a credit you claim later. Nothing arrives in your mailbox. The benefit shows up as tax that was never added to your contract price in the first place.
The regulation that sits under the statute is 3.2.247.8 NMAC — the New Mexico Taxation and Revenue Department rule covering how the deduction is applied and what documentation supports it. When a contractor tells you solar is “tax free” in New Mexico, those two citations are what they should be pointing at.
| NMSA 1978 § 7-9-112 | Gross receipts deduction for the sale and installation of solar energy systems. Seller-side. Applied at the time of sale. |
|---|---|
| 3.2.247.8 NMAC | The Taxation and Revenue Department regulation under that statute — how the deduction is applied and documented. |
| NMSA 1978 § 7-2-18.31 | New Solar Market Development income tax credit. A different statute and a different tax — claimed by the taxpayer on a New Mexico income tax return. |
The paperwork: who does what
The seller claims the deduction; the buyer documents it. In practice that means you sign a nontaxable transaction certificate or an attestation confirming the purchase, the seller files it with the job records, and the seller reports the deducted receipts on the gross receipts return for that period. Your part takes about two minutes. The seller’s part is the part that has to be right, because it is the seller who answers to the state if the documentation is thin.
What a buyer should expect to provide:
- Your name as it will appear on the contract and the property address for the work.
- A signature on the attestation or certificate the seller prepares.
- The signature back before the seller files that period’s return — late paperwork is the usual reason a deduction turns into a refund request instead.
If a contractor cannot explain in plain language how they document the deduction, treat that as information about the contractor. This is routine bookkeeping for anyone selling solar in New Mexico.
It is not the § 7-2-18.31 solar tax credit
These get conflated constantly, including by salespeople who should know better. The New Solar Market Development income tax credit lives at NMSA 1978 § 7-2-18.31 and is a credit against New Mexico income tax, claimed by the taxpayer through the state’s own certification process. The GRT deduction is a business tax deduction the seller takes on receipts. Different statute, different tax, different filer, different timing.
| GRT deduction (§ 7-9-112) | Income tax credit (§ 7-2-18.31) | |
|---|---|---|
| Which tax | Gross receipts tax | New Mexico personal income tax |
| Who claims it | The seller, on its business return | The taxpayer, on their own return |
| When you see it | At purchase — tax never added to the price | At tax filing, after certification |
| What you do | Sign the attestation the seller prepares | Apply, certify, and file with your preparer |
We deliberately do not quote the credit’s percentage, cap, or current availability on this page. Those terms move, and a stale number in a contractor’s guide is how people end up budgeting for money that is not there. Ask your tax preparer, or go to the state directly, before you count on it.
What to check on a New Mexico solar quote
- Is there a tax line at all? On a qualifying job there should not be gross receipts tax passed through to you. If there is, ask why.
- Does the quote say the deduction was applied? Good quotes say so in writing rather than leaving you to infer it from the absence of a line item.
- Who prepares the attestation? The seller should hand you the document, not ask you to find one.
- Does the scope split cleanly? Some property work — trenching, septic, general site work — is not a solar energy system. Ask how the contractor treats a mixed scope, because that is where honest quotes differ from sloppy ones.
- Same question on change orders. Work added mid-project gets the same treatment as work on the original contract, or it should.
How we handle it, including for past customers
We apply the § 7-9-112 deduction on qualifying work, we prepare the buyer attestation and bring it to you, and the signed copy stays in the job file with the contract and the permit records. You do not have to ask for it and you do not pay extra for it. If a project mixes solar with well, water line, or septic work, we identify which receipts fall under the statute rather than guessing in either direction.
Related reading: our breakdown of what off-grid solar actually costs in New Mexico covers how the tax treatment fits alongside equipment and labor pricing — including the federal residential credit that ended on December 31, 2025.