New Mexico has a gross receipts tax structure for businesses instead of a sales tax. Businesses are taxed on the gross amount of their business receipts each year before expenses are deducted. Revenue generated by the sale and installation of a "qualified generating facility" may be deducted from gross receipts before the gross receipts tax is calculated. The deductions are allowed for a 10-year period starting the year construction begins. Qualified generating facilities have a minimum nameplate capacity of 1 megawatt (MW) and include geothermal thermal electric, photovoltaic, solar thermal electric, and recycled energy systems. Solar facilities with associated renewable energy storage facilities are also eligible.
To qualify for the exemption, the owner of a qualified generating facility must first obtain a certificate of eligibility from the Department of Environment. The owner must then present the certificate of eligibility to the Taxation and Revenue Department to obtain a nontaxable transaction certificate. The owner must then give the nontaxable transaction certificate to the seller of the equipment. This credit can be claimed on equipment leased in addition to equipment purchased.