New Mexico Heat Pump Rebates
Stackable incentives available to New Mexico homeowners installing a qualifying heat pump in 2026.
Rebate data is re-verified against primary sources every two months.
What's available in New Mexico
New Mexico has no statewide non-income-qualified heat pump rebate, but residents can combine several useful incentives. PNM (the largest utility, serving most of the state) offers a flat $550 cooling rebate for a split or packaged air-source heat pump, contingent on a prior PNM Home Energy Checkup. The state Sustainable Building Tax Credit adds $1,000 (or $2,000 for low-income filers) per heat pump install through January 1, 2028, and a separate refundable 30%-up-to-$9,000 geothermal ground-coupled heat pump tax credit (NMSA 7-2-18.24, enacted 2024) is available for ground-source installs through December 31, 2034; EMNRD does not allow the two state credits to be combined on the same system. El Paso Electric runs a New Mexico Residential Comprehensive program with per-ton heat pump rebates of $100-$175/ton (up to about $875 for a 5-ton Tier 2 system) and GSHP rebates of $700/unit. Income-qualified households below 80% AMI can layer the federally-funded HEAR program for up to $8,000 per heat pump (and $1,750 for a heat pump water heater); NM launched HEAR in September 2024 as the third state nationally and the first to deliver instant point-of-sale rebates in retail stores.
HEEHRA in New Mexico
HEEHRA rebate: Point-of-sale rebate up to $8,000 for households at or below 80% of area median income. Funded by the IRA, administered by each state. New Mexico is finalizing program rules.
How heat pump rebates work in New Mexico
New Mexico has no statewide non-income-qualified heat pump rebate, but residents stack several useful incentives. PNM (the largest utility, serving most of the state) offers a flat $550 cooling rebate for a split or packaged air-source heat pump, contingent on a prior PNM Home Energy Checkup. The state Sustainable Building Tax Credit adds $1,000 (or $2,000 for low-income filers) per heat pump install, and a separate refundable 30%-up-to-$9,000 geothermal ground-coupled heat pump tax credit (NMSA 7-2-18.24, enacted 2024) is available for ground-source installs through December 31, 2034. El Paso Electric runs a New Mexico Residential Comprehensive program with per-ton heat pump rebates of $100–$175/ton (up to ~$875 for a 5-ton Tier 2 system) and GSHP rebates of $700/unit. Income-qualified households below 80% AMI can layer the federally-funded HEAR program for up to $8,000 per heat pump (and $1,750 for a heat pump water heater); NM launched HEAR in September 2024 as the third state nationally and the first to deliver instant point-of-sale rebates in retail stores. NM's combination of state tax credits + utility rebates + working HEAR makes it one of the most usable rebate stacks in the Southwest for moderate-income households.
New Mexico rebate programs
PNM Cooling Rebate (Air-Source Heat Pump)
$550PNM's current cooling rebate is a flat $550 for a split or packaged air-source heat pump replacing an existing unit rated SEER 13 or less. It requires a prior PNM Home Energy Checkup and purchase within six months of that checkup, and is limited to two cooling rebates per account. The previously listed $200/$300/$600 CEE-tier structure for new installs is no longer what PNM publishes.
NM Sustainable Building Tax Credit (SBTC) — Heat Pump
$1,000State income-tax credit administered by EMNRD ECMD covering ENERGY STAR air-source and ground-source heat pumps and heat pump water heaters installed in existing homes. $1,000 per product installed (equipment plus installation) for most homeowners; $2,000 for low-income residents or affordable housing units. Credits come from a capped annual statewide allocation ($2.9M for energy-conserving products) approved first-come, first-served, and the program is currently listed as running through January 1, 2028. Apply online to EMNRD for a certificate before claiming on your NM PIT return; it cannot be combined with the state geothermal heat pump credit on the same system.
NM HEAR (Home Electrification and Appliance Rebate) — Heat Pump
$8,000IRA-funded, EMNRD-administered program offering up to $8,000 for an ENERGY STAR-certified electric heat pump for households at or below 80% of county AMI (or enrolled in qualifying federal benefit programs). Coupon-based instant rebate at point of sale through registered contractors; whole-home cap is $14,000 across appliances.
NM Geothermal Ground-Coupled Heat Pump Income Tax Credit
$9,000Refundable state income-tax credit equal to 30% of the purchase and installation cost of a qualifying ground-source (geothermal) heat pump, capped at $9,000 per taxpayer, with a $4 million statewide annual cap approved first-come, first-served. Authorized by NMSA 7-2-18.24 (enacted 2024); installations between May 15, 2024 and December 31, 2034 qualify. Equipment must meet EER of 16 or higher OR COP of 3.4 or higher with independent third-party (AHRI) certification, and must be installed by an IGSHPA-certified (or equivalent) installer and pass local inspection. Apply through the EMNRD ECMD portal. EMNRD states this credit cannot be combined with the NM Sustainable Building Tax Credit on the same heat pump, so pick one. The federal 25D credit was repealed effective December 31, 2025; this state credit is separate and still applies.
El Paso Electric NM Residential Heat Pump Rebate
$875El Paso Electric NM residential customers only (southern NM). Per-ton rebate: Split HP $100/ton (Tier 1, SEER2 15.2+) or $175/ton (Tier 2, SEER2 17+); Packaged HP same tiers. Max system <65k BTUHr (~5.4 tons), so up to ~$875 at Tier 2 for a 5-ton system ($525 for a typical 3-ton). GSHP separate at $700/unit. Must use AHRI-matched system installed by licensed HVAC contractor. Submit rebate within program year.
5 utility-specific programs not shown here. Enter your ZIP in the calculator to filter to just your utility.
A worked example: geothermal retrofit in Santa Fe
Carmen owns a 2,200 sq ft home in Santa Fe served by PNM. She has a half-acre lot with good geothermal-loop space and a failing forced-air gas furnace. She gets quotes for a 4-ton closed-loop ground-source heat pump (ClimateMaster Tranquility, 33 EER, 5.0 COP) installed at $36,500 including the loop field. Because the equipment meets NMSA 7-2-18.24's EER ≥16 / COP ≥3.4 threshold, she qualifies for the New Mexico Geothermal Ground-Coupled Heat Pump Income Tax Credit at 30% of $36,500 = $10,950, capped at $9,000 — she receives the full $9,000 cap (refundable, processed through EMNRD ECMD). EMNRD does not allow the $1,000 Sustainable Building Tax Credit to be combined with the geothermal credit on the same system, so she claims only the larger geothermal credit. The federal §25D residential clean energy credit was repealed effective December 31, 2025, so her 2026 install gets no federal credit — but New Mexico's geothermal credit remains. Her household income is approximately 130% of Santa Fe County AMI — above the 80% threshold for NM HEAR. State credit: $9,000 NM geothermal credit against $36,500 installed. Net effective cost: $27,500.
Choosing a contractor in New Mexico
New Mexico licenses HVAC contractors through the Construction Industries Division under classification MM98 (Mechanical Contractor — HVAC). Verify at rld.nm.gov before signing. NM HEAR requires a registered HEAR contractor; the registered-contractor lookup is at clean.energy.nm.gov. PNM Cooling Rebates require the contractor to be a PNM-registered program contractor. For the New Mexico Geothermal Heat Pump Tax Credit, the contractor must submit AHRI certification meeting EER ≥16 / COP ≥3.4 with independent third-party verification through the EMNRD ECMD portal — typically 3-4 weeks of processing.
Common pitfalls for New Mexico homeowners
- Assuming the NM geothermal tax credit applies to air-source installs. The New Mexico Geothermal Ground-Coupled Heat Pump Income Tax Credit applies only to ground-source (geothermal) systems — not air-source. The credit's eligibility is gated on EER ≥16 OR COP ≥3.4 with independent third-party certification, which only ground-source equipment typically meets. Air-source heat pumps in NM get the smaller $1,000 Sustainable Building Tax Credit instead.
- Confusing NM HEAR income tiers. NM HEAR covers 100% of project cost up to $14,000 whole-home (with $8,000 of that available for heat pumps specifically) for households below 80% AMI. The program does NOT have a separate 80-150% AMI tier in NM; it's strictly an 80% AMI program. Moderate-income households above 80% AMI cannot claim HEAR and rely on the state tax credits + utility rebates only.
Estimate your net cost
Used to determine HEEHRA eligibility (under 80% area median income).
- NM Sustainable Building Tax Credit (SBTC) — Heat Pump−$1,000
- El Paso Electric NM Residential Heat Pump Rebate−$875
- PNM Cooling Rebate (Air-Source Heat Pump)−$550
Estimate only. Includes only programs accepting applications today — waitlisted or closed programs are excluded. Mutually exclusive programs (e.g. HEEHRA vs HOMES) and project-cost caps are applied per current program rules; confirm with your installer and utility before signing.
How to claim each rebate
- Get pre-approved (where required). Some utility programs require approval before install. Check program details before signing a contract.
- Use a participating contractor. Many programs require a licensed installer from an approved contractor list — especially HEEHRA, which routes through CEC-approved contractors who process the rebate at point of sale.
- Save documentation. AHRI certificate, model numbers, and itemized invoice are required for most utility rebates.
- Submit utility rebate within 60–90 days of install. Some programs are first-come first-served and close mid-year — funding can run out before the calendar year does.
If you can't afford a replacement in New Mexico
Rebates lower the price, but they still assume you can pay the rest. If your heating system is unsafe or has failed and a new one is out of reach, these programs repair or replace equipment at low or no cost for income-qualified households. Heat Pump Pricing Index is an independent information site — we don't fund, discount, or install equipment — so these are the doors to knock on first:
- Weatherization Assistance Program (WAP). Free energy and health-and-safety repairs — an unsafe furnace is exactly the kind of problem it fixes — for households at or near 200% of the poverty line. Apply through your local community action agency: how to apply (energy.gov).
- LIHEAP. Heating-bill help plus, in most states, a crisis component for broken or dangerous heating equipment. Same local agency; New Mexico LIHEAP contacts.
- USDA Section 504 Home Repair. For homeowners outside cities: 1% loans up to $40,000, and grants up to $10,000 for homeowners 62 and older to remove health and safety hazards. Program page and state offices (rd.usda.gov).
- Your utility and 211. Most electric and gas utilities run an income-qualified assistance fund — call the number on your bill and ask. Dialing 211 reaches a local specialist who knows which agencies in New Mexico currently have funds.
Safety first: if a technician has told you a heat exchanger is cracked, stop using the furnace and make sure you have a working carbon monoxide detector before anything else.