On March 3, 2026, New Mexico Governor Michelle Lujan Grisham signed House Bill 154 (Laws 2026, Chapter 17). The bill rewrites the definition of "advanced energy product" that governs the state's Advanced Energy Equipment Income Tax Credit (Section 7-2-18.39 NMSA 1978) and its corporate counterpart (Section 7-2A-19.3 NMSA 1978). The credits, worth 20% of manufacturing-equipment costs up to $25 million per taxpayer, now reach fusion machines, 48 named critical minerals, and inverters, alongside the solar, wind, and battery components the program already covered. The bill, sponsored by Rep. Meredith Dixon (D-Bernalillo) with Reps. Linda Serrato and Joshua Hernandez and Sen. Nicole Tobiassen, passed the House 59-5 on February 11, 2026 and the Senate 36-6 on February 17, 2026. The expanded definition applies to taxable years beginning on or after January 1, 2026.
Key Takeaways
| 01 | HB 154 decouples New Mexico's credit from Section 45X. Fusion now qualifies, and federal phase-outs and prohibited-foreign-entity restrictions no longer flow through to state eligibility. |
| 02 | New Mexico is the first state to extend a manufacturing-equipment credit to fusion machines. For fusion developers building around Los Alamos and Sandia, 20% of production-equipment cost is now on the table. |
| 03 | A $50 million equipment program yields a $10 million credit. The $25 million statewide cap supports at most $125 million of certified equipment spend across all taxpayers each year. |
| 04 | A $25 million annual statewide certification cap makes timing decisive. The Legislative Finance Committee (LFC) notes that revenue estimates already assume the credit hits that cap, and more applicants now compete for it. |
| 05 | Credits are transferable in $1 million increments and carry forward five years. For pre-revenue manufacturers with limited New Mexico tax liability, transferability converts the credit into near-term project capital. |
The expansion is New Mexico's bid to convert its national-laboratory research base into a manufacturing base. It makes New Mexico the first state to extend an equipment tax credit to fusion machines, a category no federal manufacturing credit covers.
HB 154 decouples New Mexico's credit from federal law. As enacted in 2024 (Laws 2024, Chapter 67), the credit defined an "advanced energy product" as anything eligible for the federal advanced manufacturing production credit under Internal Revenue Code Section 45X. The Legislative Finance Committee's fiscal impact report lists three effects of the swap. Fusion technology is not a 45X-eligible component at all. The state list omits 45X's technical thresholds for batteries, minerals, and inverters. Federal phase-outs and prohibited-foreign-entity restrictions no longer flow through to state eligibility. New Mexico's credit is now both broader and more durable than the federal benchmark it once tracked.
The expansion anchors a larger bet. The 2026 session invested more than $500 million in economic development, including more than $270 million in emerging technologies such as fusion and quantum, according to Governor Lujan Grisham's session summary. New Mexico hosts Los Alamos and Sandia national laboratories, and the credit offsets 20% of the production equipment for manufacturers that build the machines or refine the minerals in the state.
"When we look at legislation, there are a couple of bills that will facilitate and make it easier for some of these advanced energy companies to set up shop here in New Mexico and grow and expand."
Rep. Meredith Dixon (D-Bernalillo), sponsor of HB 154
Source: Albuquerque Journal, February 2026. Photo: official portrait, New Mexico Legislature.
The credit equals 20% of qualified manufacturing-equipment expenditures, capped at $25 million per taxpayer. Qualified expenditures are purchases of equipment dedicated to manufacturing advanced energy products, made on or after January 1, 2025 and before January 1, 2033, at a qualified New Mexico facility, meaning one that adds production equipment and personnel not previously at the site. For a company investing $50 million in qualifying equipment, the credit is worth $10 million. The per-taxpayer cap binds only above $125 million of qualified spend.
A $25 million annual statewide certification cap makes timing decisive. The Energy, Minerals and Natural Resources Department (EMNRD) may certify no more than $25 million in combined personal and corporate credits per calendar year. The LFC notes that the December 2025 consensus revenue estimate already assumes the credit hits that cap, and a broader eligible universe means more applicants competing for the same envelope. In the LFC's words, the bill "is likely to increase utilization of the existing credit authority and accelerate claims toward the statutory cap."
Credits are transferable and carry forward five years. Certificates may be sold, exchanged, or transferred in increments of at least $1 million, with notice to the Taxation and Revenue Department within 10 days of transfer. Unused credit carries forward for five consecutive taxable years. Exhibit 1 summarizes the terms.
Exhibit 1
Advanced Energy Equipment Tax Credit at a glance, as amended by HB 154
| Feature | Terms |
|---|---|
| Credit rate | 20% of qualified expenditures |
| Per-taxpayer cap | $25 million |
| Statewide annual certification cap | $25 million (personal and corporate combined) |
| Qualified expenditure window | Jan. 1, 2025 through Dec. 31, 2032 |
| Expanded definition applies | Taxable years beginning on or after Jan. 1, 2026 |
| Carryforward | 5 consecutive taxable years |
| Transferability | Increments of $1 million or more, 10-day notice |
| Recapture | Repayment if production ceases for at least 180 days within two years of claiming |
Sources: Section 7-2-18.39 NMSA 1978, as amended by HB 154 (Laws 2026, Chapter 17); LFC Fiscal Impact Report, Jan. 27, 2026.
Under the final act, six product families qualify. The first three carry over from the 45X-based definition. The last three are new to the state credit. Exhibit 2 summarizes them.
Exhibit 2
Advanced energy product families, as enacted in HB 154
| Product family | Covered products |
|---|---|
| Solar energy components | Modules, PV cells and wafers, solar-grade polysilicon, torque tubes, backsheets |
| Wind energy components | Blades, nacelles, and towers |
| Battery components | Electrode-active materials, battery cells, battery modules |
| Fusion machines and components | Including associated systems essential to the fusion process; no federal analog |
| Critical minerals (48 named) | Lithium, cobalt, nickel, graphite, gallium, germanium, neodymium, zirconium, and 40 more |
| Inverters sold as end products | Central, commercial, distributed wind, micro, residential, and utility |
Sources: HB 154, Final Version (Laws 2026, Chapter 17), New Mexico Legislature. Categories as enacted.
The critical-minerals list is the largest single addition. The 48 minerals span battery inputs (lithium, cobalt, nickel, graphite, manganese), semiconductor and defense materials (gallium, germanium, indium, tantalum, tungsten), the full run of rare earth elements from lanthanum through lutetium, and platinum-group metals. Raw ore does not qualify. The mineral must be converted or purified to a specified purity or form, which points the credit at refining and processing equipment rather than extraction.
Fusion manufacturing is taking shape in Albuquerque. Pacific Fusion has committed roughly $1 billion to a research and manufacturing campus in Albuquerque, and its chief operating officer told the Albuquerque Journal during the session that state incentives would help bring component manufacturing work to New Mexico. Under the new definition, equipment used to manufacture a fusion machine, its components, or the associated systems essential to the fusion process is eligible for the 20% credit.
The statute requires preliminary certification before any qualified spend. The claim sequence runs through EMNRD, in consultation with the Economic Development Department. Preliminary certification on Form 45.A comes before any qualified expenditure, and EMNRD confirms the products qualify and estimates the credit. Only one certificate of eligibility is issued per facility, regardless of ownership. Final certification on Form 45.B follows within 12 months of commencing production, after an EMNRD site visit, and the dated certificate states the credit amount and claim years. The credit is claimed within one year of final certification, and excess carries forward five years. A Form 45.D filing at the two-year mark documents continued operations, because ceasing production for at least 180 days within two years triggers repayment.
Forms are submitted to advanced.energy.equipment@emnrd.nm.gov, and EMNRD posts current-year application forms on its program page. Exhibit 3 lists each stage.
Exhibit 3
Claim sequence stages, EMNRD Forms 45.A, 45.B, and 45.D
| Stage | What happens |
|---|---|
| Form 45.A | Preliminary certification, filed before any qualified expenditure |
| Purchase | Qualified equipment spend at a qualified NM facility |
| Production | Manufacturing of advanced energy products begins |
| Form 45.B | Final certification within 12 months of commencing production; EMNRD site visit |
| Claim | Claim within 1 year of final certification; 5-year carryforward |
| Form 45.D | Two-year operations check; 180-day stoppage triggers repayment |
Sources: Section 7-2-18.39 NMSA 1978 and the EMNRD Advanced Energy Equipment Tax Credit program page.
The same sequence sits on a calendar. Exhibit 4 places each filing against the statutory dates, from the bill's signing through the close of the expenditure window in 2032.
Exhibit 4
HB 154 and claim timeline, as of March 4, 2026
| Date | Action |
|---|---|
| Jan. 1, 2025 | Qualified expenditure window opens (Laws 2024, Chapter 67) |
| Jan. 1, 2026 | Expanded definition applies to taxable years beginning on or after this date |
| Feb. 11, 2026 | HB 154 passes House, 59-5 |
| Feb. 17, 2026 | HB 154 passes Senate, 36-6 |
| Mar. 3, 2026 | Governor signs HB 154 (Laws 2026, Chapter 17) |
| Before first equipment spend | File Form 45.A for preliminary certification |
| Within 12 months of commencing production | File Form 45.B for final certification; EMNRD site visit |
| Within 1 year of final certification | Claim the credit; excess carries forward 5 years |
| 2 years after claiming | File Form 45.D; 180-day stoppage triggers repayment |
| Dec. 31, 2032 | Qualified expenditure window closes |
Sources: See References below.
This is for solar, wind, battery, inverter, critical-mineral, and fusion manufacturers weighing New Mexico equipment spend before the window closes on December 31, 2032. The statewide certification cap is $25 million a year, the LFC already assumes it will be reached, and Form 45.A has to be filed before the first qualified purchase. If you want a read on fit before you sign equipment purchase orders, reach out to our team.
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