SENATE BILL 40

56th legislature - STATE OF NEW MEXICO - second session, 2024

INTRODUCED BY

William P. Soules

 

 

 

 

 

AN ACT

RELATING TO TAXATION; EXTENDING THE GEOTHERMAL GROUND-COUPLED HEAT PUMP TAX CREDITS PURSUANT TO THE INCOME TAX ACT AND THE CORPORATE INCOME AND FRANCHISE TAX ACT; INCREASING THE ANNUAL AGGREGATE CAPS; MAKING THE CREDIT PURSUANT TO THE INCOME TAX ACT REFUNDABLE; AMENDING THE DEFINITION OF "GEOTHERMAL GROUND- COUPLED HEAT PUMP" FOR THE CREDITS.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. Section 7-2-18.24 NMSA 1978 (being Laws 2009, Chapter 271, Section 1) is amended to read:

     "7-2-18.24. GEOTHERMAL GROUND-COUPLED HEAT PUMP INCOME TAX CREDIT.--

          A. A taxpayer who files an individual New Mexico income tax return for a taxable year beginning on or after January 1, [2010] 2024 and who purchases and installs after January 1, [2010] 2024 but before December 31, [2020] 2034 a geothermal ground-coupled heat pump in a residence, business or agricultural enterprise in New Mexico owned by that taxpayer may apply for, and the department may allow, a tax credit of up to thirty percent of the purchase and installation costs of the system. The credit provided in this section may be referred to as the "geothermal ground-coupled heat pump income tax credit". The total geothermal ground-coupled heat pump income tax credit allowed to a taxpayer shall not exceed nine thousand dollars ($9,000). The department shall allow a geothermal ground-coupled heat pump income tax credit only for geothermal ground-coupled heat pumps that are installed by a nationally accredited ground source heat pump installer certified by the energy, minerals and natural resources department.

          B. [A] That portion of [the] a geothermal ground-coupled heat pump income tax credit that [remains unused in a] exceeds a taxpayer's tax liability in the taxable year [may be carried forward for a maximum of ten consecutive taxable years following the taxable year in which the credit originates until the credit is fully expended] in which the credit is claimed shall be refunded to the taxpayer.  

          C. [Prior to July 1, 2010] The energy, minerals and natural resources department shall adopt rules establishing procedures to provide certification of geothermal ground-coupled heat pumps for purposes of obtaining a geothermal ground-coupled heat pump income tax credit. The rules shall address technical specifications and requirements relating to safety, building code and standards compliance, minimum system sizes, system applications and lists of eligible components. The energy, minerals and natural resources department may modify the specifications and requirements as necessary to maintain a high level of system quality and performance.

          D. The department may allow a maximum annual aggregate of [two million dollars ($2,000,000)] sixteen million dollars ($16,000,000) in geothermal ground-coupled heat pump income tax credits. Applications for the credit shall be considered in the order received by the department.

          E. A taxpayer who otherwise qualifies and claims a geothermal ground-coupled heat pump income tax credit with respect to property owned by a partnership or other business association of which the taxpayer is a member may claim a credit only in proportion to that taxpayer's interest in the partnership or association. The total credit claimed in the aggregate by all members of the partnership or association with respect to the property shall not exceed the amount of the credit that could have been claimed by a sole owner of the property.

          F. [A husband and wife] Married individuals who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the credit that would have been allowed on a joint return.

          G. A taxpayer who claims a 2021 sustainable building tax credit using a geothermal ground-coupled heat pump as a component of qualification for the rating system certification level used in determining eligibility for that credit shall not be eligible to claim a geothermal groundcoupled heat pump income tax credit for the same geothermal ground-coupled heat pump.

          H. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the department in a manner required by the department.

          I. The department shall compile an annual report on the tax credit provided by this section 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.

          [G.] J. As used in this section, "geothermal ground-coupled heat pump" means a [system that uses energy from the ground, water or, ultimately, the sun for distribution of heating, cooling or domestic hot water] heating and refrigerating system that directly or indirectly utilizes available heat below the surface of the earth for distribution of heating and cooling or domestic hot water and that has either a minimum coefficient of performance of three and four-tenths or an efficiency ratio of sixteen or greater [and that is installed by an accredited installer certified by the international ground source heat pump association]."

     SECTION 2. Section 7-2A-24 NMSA 1978 (being Laws 2009, Chapter 271, Section 2) is amended to read:

     "7-2A-24. GEOTHERMAL GROUND-COUPLED HEAT PUMP CORPORATE INCOME TAX CREDIT.--

          A. A taxpayer that files a New Mexico corporate income tax return for a taxable year beginning on or after January 1, [2010] 2024 and that purchases and installs after January 1, [2010] 2024 but before December 31, [2020] 2034 a geothermal ground-coupled heat pump in a property owned by the taxpayer may claim against the taxpayer's corporate income tax liability, and the department may allow, a tax credit of up to thirty percent of the purchase and installation costs of the system. The credit provided in this section may be referred to as the "geothermal ground-coupled heat pump corporate income tax credit". The total geothermal ground-coupled heat pump corporate income tax credit allowed to a taxpayer shall not exceed nine thousand dollars ($9,000). The department shall allow a geothermal ground-coupled heat pump corporate income tax credit only for geothermal ground-coupled heat pumps that are installed by a nationally accredited ground source heat pump installer certified by the energy, minerals and natural resources department.

          B. A portion of the geothermal ground-coupled heat pump corporate income tax credit that remains unused in a taxable year may be carried forward for a maximum of ten consecutive taxable years following the taxable year in which the credit originates until the credit is fully expended.

          C. [Prior to July 1, 2010] The energy, minerals and natural resources department shall adopt rules establishing procedures to provide certification of geothermal ground-coupled heat pumps for purposes of obtaining a geothermal ground-coupled heat pump corporate income tax credit. The rules shall address technical specifications and requirements relating to safety, building code and standards compliance, minimum system sizes, system applications and lists of eligible components. The energy, minerals and natural resources department may modify the specifications and requirements as necessary to maintain a high level of system quality and performance.  

          D. The department may allow a maximum annual aggregate of [two million dollars ($2,000,000)] sixteen million dollars ($16,000,000) in geothermal ground-coupled heat pump corporate income tax credits. Applications for the credit shall be considered in the order received by the department.

          E. A taxpayer that claims a 2021 sustainable building tax credit using a geothermal ground-coupled heat pump as a component of qualification for the rating system certification level used in determining eligibility for that credit shall not be eligible to claim a geothermal groundcoupled heat pump corporate income tax credit for the same geothermal ground-coupled heat pump.

          F. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the department in a manner required by the department.

          G. The department shall compile an annual report on the tax credit provided by this section 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.

          [E.] H. As used in this section, "geothermal ground-coupled heat pump" means a [reversible refrigerator device that provides space heating, space cooling, domestic hot water, processed hot water, processed chilled water or any other application where hot air, cool air, hot water or chilled water is required and that utilizes ground water or water circulating through pipes buried in the ground as a condenser in the cooling mode and an evaporator in the heating mode] heating and refrigerating system that directly or indirectly utilizes available heat below the surface of the earth for distribution of heating and cooling or domestic hot water and that has either a minimum coefficient of performance of three and four-tenths or an efficiency ratio of sixteen or greater."

     SECTION 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2024.

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