Gross Receipts Tax Exemption for Sales of Wind and Solar Systems to Government Entities

In March 2010, New Mexico enacted S.B. 201, a legislative measure designed to support and stimulate the adoption of renewable energy sources within the state, specifically targeting the growth of solar energy. Unlike the more common sales tax framework, New Mexico operates under a gross receipts tax system for businesses. This system taxes businesses on the total gross revenues generated before any deductions for expenses. Within this taxation structure, certain exemptions are applied to encourage specific activities or industries. Prior to the enactment of S.B. 201, New Mexico had already established an exemption from gross receipts taxes for the sale of wind turbine equipment when sold to federal, state, or local government entities, recognizing the importance of supporting renewable energy sources.

S.B. 201 significantly expanded this supportive framework by extending the tax exemption to include solar thermal electric and photovoltaic systems sold to government entities, effective from July 1, 2010. This move was strategically designed to lower the financial barriers for the adoption of solar energy solutions by government bodies, thereby promoting the growth of the solar industry within the state. By making solar energy systems more financially attractive to government entities through tax exemptions, New Mexico aimed to increase the implementation of solar projects, contribute to the state’s renewable energy goals, and foster a more sustainable energy future. This legislation reflects New Mexico’s commitment to renewable energy and its proactive approach in utilizing fiscal policies to encourage the development and adoption of green energy technologies.