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NM — State Policy Updated January 2026

New Mexico

Statewide incentives and constraints, plus key local approvals and active policy debates tied to data center development.

Job Training Incentive Program (JTIP) High Wage Jobs Tax Credit Local Economic Development Act (LEDA) Industrial Revenue Bonds (county-level) Energy Transition Act renewable mandates Air Quality permitting for on-site generation Water rights in declared groundwater basins Water Constraints

Overview

New Mexico recruits data centers with state training grants, wage tax credits, and local bond authority, while counties can offer multi-decade property tax abatements through PILOT agreements. At the same time, the state’s Energy Transition Act locks in a path to 100% zero-carbon electricity by 2045, and air quality regulators have recently pushed back on large natural-gas microgrid proposals, signaling tighter scrutiny of on-site generation. Water rights in declared groundwater basins add another layer of permitting for cooling-intensive facilities.

Incentives

Job Training Incentive Program (JTIP)

The state reimburses a significant share of on-the-job training costs for new full-time positions at companies that export at least 50% of services outside New Mexico.[1]

  • Jobs must be new, full-time (32+ hours/week), year-round, with trainees guaranteed full-time employment after training.
  • In urban areas, employers with more than 20 employees must offer health insurance and pay at least 50% of the premium for employees who elect coverage.
  • Data centers qualify as eligible “economic-base” service exporters if they meet the export threshold and physical presence requirements.

High Wage Jobs Tax Credit

This credit provides 8.5% of wages paid to each qualifying employee, capped at $12,750 per qualifying period, and can be claimed for three consecutive qualifying periods.[2]

  • Applies to new high-wage jobs created between July 1, 2004 and before July 1, 2026.
  • The credit reduces gross receipts or compensating tax liability, offering savings to employers who meet wage and job-creation thresholds.

Local Economic Development Act (LEDA)

LEDA authorizes cities and counties to support economic development projects through public-private partnerships, infrastructure investments, and regional joint powers agreements.[3]

  • Local governments can use LEDA to package infrastructure improvements, land assembly, or workforce training as part of a data center site offer.
  • The statute does not mandate support—local councils must adopt ordinances and appropriate funds case by case.

Industrial Revenue Bonds and Property Tax Abatements (County-Level)

Counties can issue IRBs to finance data center construction and pair them with long-term property tax abatements, offset by negotiated PILOT payments. In late 2025, Doña Ana County approved an ordinance authorizing up to $165 billion in IRBs for Project Jupiter, plus a 30-year property tax abatement replaced by PILOT payments.[4]

Requirements and Conditions

Energy Transition Act Renewable Portfolio Standards

New Mexico’s Energy Transition Act sets binding renewable energy targets: 40% by 2025, 50% by 2030, 80% by 2040, and 100% zero-carbon by 2045 (subject to reliability and affordability conditions).[5]

  • These mandates shape the long-term power mix available to large loads and drive utility resource planning.
  • Data centers negotiating long-term power contracts must account for the transition to renewables and potential constraints on fossil-fueled supply.

Air Quality Permitting for On-Site Generation

Data centers planning on-site generation or large emergency generator fleets must obtain New Source Review (NSR) construction permits and, if emissions thresholds are exceeded, Title V operating permits from the New Mexico Environment Department.[6]

  • NSR triggers when new sources emit pollutants above specified thresholds; Title V applies to “major sources” exceeding 250 tons per year of a criteria pollutant (or lower thresholds in nonattainment areas).
  • In December 2025, NMED ruled Project Jupiter’s air quality permit applications incomplete, citing insufficient detail on natural-gas microgrids and emissions near the 250 tons/year NOx major source threshold.[8]

Water Rights in Declared Groundwater Basins

The Office of the State Engineer declares groundwater basins and assumes jurisdiction over groundwater appropriation and use within those basins.[7]

  • Large water users—including data centers with evaporative cooling—must secure water rights permits in declared basins.
  • Permitting timelines and approval conditions vary by basin priority and existing claims.

What to Watch

  • Project Jupiter air permit review — NMED’s incomplete ruling in December 2025 signals heightened scrutiny of on-site generation plans; watch for revised applications and final permit decisions in 2026.
  • Energy Transition Act compliance timelines — Utilities must file integrated resource plans showing how they will meet 2030 and 2040 renewable targets; these filings will reveal whether new fossil capacity can serve data center load or whether renewables and storage must fill the gap.
  • Legislative session 2026 — Monitor bills that could adjust JTIP funding, extend the High Wage Jobs Tax Credit sunset (currently July 1, 2026), or impose new environmental conditions on large energy users.

Sources

[1] New Mexico Economic Development Department, “JTIP Policy/Procedures Manual (Fiscal Year 2026),” June 2025, https://edd.newmexico.gov/wp-content/uploads/2025/06/JTIP-Policy-FY2026.pdf (accessed January 8, 2026).

[2] New Mexico Taxation and Revenue Department, “Application for High-Wage Jobs Tax Credit (RPD-41288),” revised May 15, 2019, https://www.tax.newmexico.gov/wp-content/uploads/sites/6/2020/10/rpd-41288-20190515.pdf (accessed January 8, 2026).

[3] New Mexico Economic Development Department, “Local Economic Development Act (LEDA),” n.d., https://edd.newmexico.gov/community-development/local-economic-development-act/ (accessed January 8, 2026).

[4] Doña Ana County, “Doña Ana County approves historic IRB for $165 billion ‘Project Jupiter’ data-center campus,” n.d., https://www.donaana.gov/news_detail_T7_R35.php (accessed January 8, 2026).

[5] New Mexico Legislature (handout), “New Mexico’s Energy Transition Act: Update on Implementation,” September 18, 2020, https://www.nmlegis.gov/handouts/NMFA%20091820%20Item%201%20NM%20Energy%20Transition%20Act.pdf (accessed January 8, 2026).

[6] New Mexico Environment Department, Air Quality Bureau, “Permitting Section Procedures and Guidance,” n.d., https://www.env.nm.gov/air-quality/permitting-section-procedures-and-guidance/ (accessed January 8, 2026).

[7] New Mexico Office of the State Engineer, “Declared Groundwater Basins” (Water Rights Allocation Program), n.d., https://www.ose.nm.gov/WR/groundWater.php (accessed January 8, 2026).

[8] Joshua Bowling, “NMED says data center Project Jupiter’s air quality applications ‘incomplete’ — for now,” Source New Mexico, December 19, 2025, https://sourcenm.com/2025/12/19/nmed-says-data-center-project-jupiters-air-quality-applications-incomplete-for-now/ (accessed January 8, 2026).