46th legislature - STATE OF NEW MEXICO - first session, 2003

RELATING TO TAXATION; PROVIDING A PERSONAL INCOME TAX CREDIT AND A CORPORATE INCOME TAX CREDIT FOR EXPENSES OF PURCHASING AND INSTALLING DRIP IRRIGATION SYSTEMS.

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

Section 1. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] TAX CREDIT--AGRICULTURAL WATER CONSERVATION EXPENSES.--

A. A taxpayer may claim a credit against his income tax liability equal to seventy-five percent of his incurred expenses, not to exceed a maximum annual credit of one thousand dollars ($1,000), for expenses of purchasing and installing a drip irrigation system after January 1, 2004. The credit may be claimed for the taxable year in which the expenses are incurred if the taxpayer in that year:

(1) owned or leased a water right appurtenant to the land on which a drip irrigation system was installed;

(2) files an individual New Mexico income tax return; and

(3) is not a dependent of another individual.

B. A taxpayer who is considered for federal income tax purposes as a co-owner of the land on which an installment of a drip irrigation system is made may claim the pro rata share of the credit allowed pursuant to this section based on the co-owner's ownership interest. The total of the credits allowed all the taxpayers considered co-owners may not exceed the amount that would have been allowed a sole owner of the land.

C. A husband and wife who file separate income tax 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.

D. If the allowable tax credit in a taxable year exceeds the income taxes otherwise due from a taxpayer pursuant to the Income Tax Act, or if there are no income taxes due from the taxpayer, the taxpayer may carry forward the amount of the credit not used in that year to offset the taxpayer's liability for income taxes pursuant to the Income Tax Act for not more than five consecutive taxable years.

E. The soil and water conservation commission shall adopt rules to assist the department in determining which irrigation systems constitute drip systems and qualify for the credit available under this section."

Section 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

"[NEW MATERIAL] TAX CREDIT--AGRICULTURAL WATER CONSERVATION EXPENSES.--

A. A taxpayer may claim a credit against his corporate income tax liability equal to seventy-five percent of his incurred expenses, not to exceed a maximum annual credit of one thousand dollars ($1,000), for expenses of purchasing and installing a drip irrigation system after January 1, 2004. The credit may be claimed for the taxable year in which the expenses are incurred if the taxpayer in that year:

(1) owned or leased a water right appurtenant to the land on which a drip irrigation system was installed; and

(2) files a New Mexico corporate income tax return.

B. A taxpayer who is considered for federal income tax purposes as a co-owner of the land on which installment of a drip irrigation system is made may claim the pro rata share of the credit allowed pursuant to this section based on the co-owner's ownership interest. The total of the credits allowed all the taxpayers considered co-owners may not exceed the amount that would have been allowed a sole owner of the land.

C. If the allowable tax credit in a taxable year exceeds the income taxes otherwise due from a taxpayer pursuant to the Corporate Income and Franchise Tax Act, or if there are no taxes due pursuant to the Corporate Income and Franchise Tax Act, the taxpayer may carry forward the amount of the credit not used in that year to offset the taxpayer's liability for income taxes pursuant to the Corporate Income and Franchise Tax Act for not more than five consecutive tax years.

D. The soil and water conservation commission shall adopt rules to assist the department in determining which irrigation systems constitute drip systems and qualify for the credit available under this section."

Section 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on and after January 1, 2004.