HB 32 — ENERGY STORAGE SYSTEM INCOME TAX CREDIT

HOUSE BILL 32 56TH LEGISLATURE -STATEOFNEWMEXICO-- STATEOFNEWMEXICO- FIRST SESSION, 2023 INTRODUCED BY Debra M.

Sariñana and Mimi Stewart andThis Taradocument L.may incorporate amendments proposed by a committee, but not yet adopted, as well as amendments that have been adopted during the current legislative session.

LujanThe 6document 8is 10a ANtool ACTto RELATINGshow TOamendments TAXATION;in context and cannot be used for the purpose of adding amendments to legislation.

CREATINGh THEAN ENERGYACT STORAGEg SYSTEMo INCOMERELATING TAXTO CREDIT.TAXATION;

14CREATING BETHE ITENERGY ENACTEDSTORAGE BYSYSTEM THEINCOME LEGISLATUREt OFhr THEg STATEe OFi NEWk MEXICO:TAX CREDIT.

SECTIONh 1.r i s h , t, BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Ae newu sectiong ofe theb Incomel Taxe Acte ish enactedSECTION to1. read:

eA tnew 17section "[NEWof MATERIAL]the ENERGYIncome STORAGETax SYSTEMAct INCOMEis TAXenacted CREDIT.--n wd ld ni d= 18= A.o h to read:

Forl taxable] yearsb prior,d toi January 1, 2028, a =º =e 19"[NEW aMATERIAL l] taxpayerENERGY whoSTORAGE isSYSTEM notINCOME aTAX dependentCREDIT.-- ofr another individual and who, i a= e r 20 on or after March 1, 2023, purchases and installs an energy a t me mw 21 storage system on the taxpayer's residence or commercial or d rm e 22 agricultural property in New Mexico may apply for, and the c e s k 23 department may allow, a credit against the taxpayer's tax e a n bo 24A. liability imposed pursuant to the Income Tax Act.

TheFor taxtaxable uyears [prior credit provided by this section may be referred to asJanuary the1, .223373.22028, "energya storaged systemm income: tax credit".

b e d s º o t n = .223373.2AIC January 26, 2023 (4:53pm) s k m e e a n e d r e l u [ A d taxpayer who is not a dependent of another individual and who, on or after March 1, 2023, purchases and installs an energy storage system on the taxpayer's residence or commercial or agricultural property in New Mexico may apply for, and the department may allow, a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act.

The tax credit provided by this section may be referred to as the "energy storage system income tax credit".

provided that no more than h one system per property shall be eligible for the credit.

u » r Costs related to equipment or installation costs for energy t h g e l i generation shall not be eligible.

h r i s C.

A taxpayer shall apply for certification of h , e h eligibility for an energy storage system income tax credit from t u g e b l e e , gh the energy, minerals and natural resources department on forms n d d i = = o h and in the manner prescribed by that department.

The aggregate el t] 17b ,d i a º r amount of credits that may be certified as eligible in any we lr n= t e w d 18m a n o calendar year is four million dollars ($4,000,000).

Completed =d =m 19: a l applications shall be considered in the order received.

Theb ir a e rt 20º applicationo shall include proof of purchase and installation of a t mn m= 21.223373.2AIC anJanuary energy26, storage2023 system,(4:53pm) that the system meets technical d r e 22 specifications and requirements relating to safety, code and c e s k 23m standardse compliance,- lists2 of- eligible components and any e a n be 24d additionalr informatione thatl the energy, minerals and natural u [ resourcesA departmentd mayapplications requireshall tobe determineconsidered eligibilityin for .223373.2 - 2 - the credit.order received.

The application shall include proof of purchase and installation of an energy storage system, that the system meets technical specifications and requirements relating to safety, code and standards compliance, lists of eligible components and any additional information that the energy, minerals and natural resources department may require to determine eligibility for the credit.

To receive the tax credit, a taxpayer shall apply to the department on forms and in the manner prescribed by the department within twelve months h following the calendar year in which the system was installed.

u » r The application shall include a certification made pursuant to t h g e l i Subsection C of this section.

If the annual aggregate amount h r i s of tax credits allowed pursuant to Subsection C of this section h , e h has been met at the time of the claim, the department shall t u g e b l e e , gh notify the taxpayer and the taxpayer may claim the credit in a n d d i = = o h following taxable year.

el t] 17b ,d i a º r E.

For that portion of an energy storage system we lr n= t e w d 18m a n o income tax credit that exceeds a taxpayer's tax liability in =d = 19 a l the taxable year in which the credit is claimed, the taxpayer i a e r 20 may elect to have the balance of the credit refunded to the a t m m: 21 taxpayer or carried forward for a maximum of five consecutive d r e 22 year.

cb r e t º o t n = .223373.2AIC January 26, 2023 (4:53pm) s k 23m F.e - 3 - e a n e d r e l u [ A d the taxable year in which the credit is claimed, the taxpayer may elect to have the balance of the credit refunded to the taxpayer or carried forward for a maximum of five consecutive year.

MarriedF. individuals filing separate returns for e a n b 24 a taxable year for which they could have filed a joint return u [ may each claim only one-half of the energy storage system .223373.2 - 3 - income tax credit that would have been claimed on a joint return.

Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the energy storage system income tax credit that would have been claimed on a joint return.

The total credit claimed by all members of the h partnership or limited liability company shall not exceed the u » r allowable credit pursuant to this section.

t h g e l i H.

A taxpayer allowed a tax credit pursuant to this h r i s section shall report the amount of the credit to the taxation h , e h and revenue department in a manner required by that department.

t u g e b l e e , gh I.

The taxation and revenue department shall n d d i = = o h compile an annual report on the energy storage system income el t] 17b ,d i a º r tax credit that shall include the number of taxpayers approved we lr n= t e w d 18m a n o by the department to receive the credit, the aggregate amount =d =m 19: a l of credits approved and any other information necessary to i a e r 20 evaluate the credit.

Theb departmentr shalle presentt theº reporto a t mn m= 21.223373.2AIC toJanuary the26, revenue2023 stabilization(4:53pm) ands taxk policym committeee and- the4 d- re a n e 22d legislativer financee committeel withu an[ analysisA d of thecredits costapproved ofand cany eother sinformation knecessary 23to theevaluate taxthe credit.

eThe adepartment nshall bpresent 24the J.report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the tax credit.

AsJ. used in this section, "energy storage system" u [ means a commercially available, customer-sited system, .223373.2 - 4 - including a battery and a battery paired with on-site generation, that is capable of retaining, storing and delivering electrical energy by chemical, thermal, mechanical or other means and has been tested and certified by a nationally recognized testing laboratory and that:

As used in this section, "energy storage system" means a HENRCº stationary,»HENRC commercially available, customer-sited system, including a battery and a battery paired with on-site generation, that is capable of retaining, storing and delivering electrical energy by chemical, thermal, mechanical or other means and HENRCº has been tested and certified by a nationally recognized testing laboratory and that:

(2) has a rating of four kilowatts or greater h with a minimum of two hours of storage;

and g o t hr (3) is installed as a stand-alone energy g e i k storage system;

or, if the energy storage system is grid-tied, h r i s has the capability to provide grid services if control and h , t, e u g communication infrastructure exists with the service provider."e SECTIONb 2.l e e h provider."»HENRC HENRCº: