SENATE BILL 121
56th legislature - STATE OF NEW MEXICO - second session, 2024
Mimi Stewart and Harold Pope and Carrie Hamblen and
Leo Jaramillo and Siah Correa Hemphill
RELATING TO TAXATION; AMENDING OWNERSHIP ELIGIBILITY REQUIREMENTS FOR THE NEW SOLAR MARKET DEVELOPMENT INCOME TAX CREDIT; INCREASING THE ANNUAL AGGREGATE AMOUNT OF CREDITS THAT MAY BE CERTIFIED IN CERTAIN CALENDAR YEARS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-2-18.31 NMSA 1978 (being Laws 2020, Chapter 13, Section 1, as amended) is amended to read:
"7-2-18.31. NEW SOLAR MARKET DEVELOPMENT INCOME TAX CREDIT.--
A. For taxable years prior to January 1, 2032, a taxpayer who is not a dependent of another individual and who, on or after March 1, 2020, purchases and installs a solar thermal system or a photovoltaic system in a residence, business or agricultural enterprise in New Mexico owned by that taxpayer or by a federally recognized Indian nation, tribe or pueblo and held in leasehold by that taxpayer may apply for, and the department may allow, a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act in an amount provided in Subsection C of this section. The tax credit provided by this section may be referred to as the "new solar market development income tax credit".
B. The purpose of the new solar market development income tax credit is to encourage the installation of solar thermal and photovoltaic systems in residences, businesses and agricultural enterprises.
C. The department may allow a new solar market development income tax credit of ten percent of the purchase and installation costs of a solar thermal or photovoltaic system.
D. The new solar market development income tax credit shall not exceed six thousand dollars ($6,000) per taxpayer per taxable year. The department shall allow a tax credit only for solar thermal and photovoltaic systems certified pursuant to Subsection E of this section.
E. Subject to the limitation provided in Subsection F of this section, a taxpayer shall apply for certification of eligibility for the new solar market development income tax credit from the energy, minerals and natural resources department on forms and in the manner prescribed by that department. [The aggregate amount of credits that may be certified as eligible in any calendar year is twelve million dollars ($12,000,000).] Completed applications shall be considered in the order received. [Applications for certification received after this limitation has been met in a calendar year shall not be approved.] The application shall include proof of purchase and installation of a solar thermal or photovoltaic system, that the system meets technical specifications and requirements relating to safety, code and standards compliance, solar collector orientation and sun exposure, minimum system sizes, system applications and lists of eligible components and any additional information that the energy, minerals and natural resources department may require to determine eligibility for the credit. A dated certificate of eligibility shall be issued to the taxpayer providing the amount of the new solar market development income tax credit for which the taxpayer is eligible and the taxable year in which the credit may be claimed. A certificate of eligibility for a new solar market development income tax credit may be sold, exchanged or otherwise transferred to another taxpayer for the full value of the credit. The parties to such a transaction shall notify the department of the sale, exchange or transfer within ten days of the sale, exchange or transfer.
F. The aggregate amount of credits that may be certified pursuant to Subsection E of this section is as follows, and applications for certification received after these limitations have been met shall not be approved:
(1) for calendar years 2020 through 2023, twelve million dollars ($12,000,000) for each calendar year; provided that if this limitation has been met for any of those calendar years, an additional twenty million dollars ($20,000,000) in credits may be certified for all of those calendar years; and provided further that credits certified pursuant to this paragraph shall be claimed only for taxable year 2023; and
(2) for calendar years 2024 and thereafter, thirty million dollars ($30,000,000).
[F.] G. A taxpayer may claim a new solar market development income tax credit for the taxable year in which the taxpayer purchases and installs a solar thermal or photovoltaic system. To receive a new solar market development income tax credit, a taxpayer shall apply to the department on forms and in the manner prescribed by the department within twelve months following the calendar year in which the system was installed; provided that, for a taxpayer that receives a certificate of eligibility pursuant to Paragraph (1) of Subsection F of this section, the taxpayer shall apply to the department within twelve months following the calendar year in which the certification is made. The application shall include a certification made pursuant to Subsection E of this section.
[G.] H. That portion of a new solar market development income tax credit that exceeds a taxpayer's tax liability in the taxable year in which the credit is claimed shall be refunded to the taxpayer.
[H.] I. 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 new solar market development income tax credit that would have been claimed on a joint return.
[I.] J. A taxpayer may be allocated the right to claim a new solar market development income tax credit in proportion to the taxpayer's ownership interest if the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership or limited liability company and that business entity has met all of the requirements to be eligible for the credit. The total credit claimed by all members of the partnership or limited liability company shall not exceed the allowable credit pursuant to this section.
[J.] K. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the taxation and revenue department in a manner required by that department.
[K.] L. The taxation and revenue department shall compile an annual report on the new solar market development income tax credit that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the credit. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the tax credit.
[L.] M. As used in this section:
(1) "photovoltaic system" means an energy system that collects or absorbs sunlight for conversion into electricity; and
(2) "solar thermal system" means an energy system that collects or absorbs solar energy for conversion into heat for the purposes of space heating, space cooling or water heating."
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