Analysis

Synopsis:

 Senate Bill 58 (SB58) creates the Electric Vehicle Income Tax Credit. SB58 creates the Electric Vehicle Charging Unit Income Tax Credit. SB58 requires an additional registration fee for electric and plug-in hybrid electric vehicles. SB58 provides that the additional registration fees be distributed to the State Road Fund and the Local Governments Road Fund. The provisions of Sections 1 and 2 apply to taxable years beginning on or after January 1, 2021. The effective date of Sections 3 and 4 of this act January 1, 2022.

Analysis:

 Senate Bill 58 (SB58) makes a change to Disposition of Fees, Section 66-6-23. NMSA 1978. Enacts two sections of the Income Tax Act and a new section of the Motor Vehicle Code. Defines terms, requires reporting. SB58 establishes the rule that provisions of Sections 1 and 2 of this act apply to taxable years beginning on or after January 1, 2021. SB58 makes the effective date of the provisions of Sections 3 and 4 of this act January 1, 2022.

Changed law: 

SB58 makes changes to Disposition of Fees, Section 66-6-23. NMSA 1978, to require distribution to the following:

•	State Road Fund in an amount equal to seventy-seven percent of the fees collected pursuant to Section 3 of this 2021 act.
•	Local Governments Road Fund in an amount equal to twenty-three percent of the fees collected pursuant to Section 3 of this 2021 act.

New Law:

Enacts a new section of the Motor Vehicle Code, titled: Additional Registration Fee-Electric and Plug-In Hybrid Electric Vehicles.

Establishes the rule, for registration of vehicles subject to the registration fees imposed by Sections 66-6-2 and 66-6-4 NMSA 1978, there is an additional:

•	annual fee of one hundred dollars ($100) for an electric vehicle with a gross vehicle weight of twenty-six thousand pounds or less is registered. 
•	annual fee of fifty dollars ($50.00) for a plug-in hybrid electric vehicle with a gross vehicle weight of twenty-six thousand pounds or less is registered. 

Requires all fees collected to be paid to the state treasurer to the credit of the Motor Vehicle Suspense Fund with distribution, in accordance with Section 66-6-23 NMSA 1978.

New Law:

SB58 enacts a new section of the Income Tax Act, titled: Electric Vehicle Income Tax Credit.

For a taxpayer who is not a dependent of another individual and who, beginning on the effective date of this section and prior to January 1, 2026, who purchases an electric vehicle or enters into a new lease of at least three years for an electric vehicle, may claim a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act in an amount provided in Subsection B of this section of the law.

Guideline:
•	The Electric Vehicle Income Tax Credit will be in an amount equal to two thousand five hundred dollars ($2,500).

•	A taxpayer who meets the following requirements will be allowed a credit in an amount equal to five thousand dollars ($5,000):

(1) a taxpayer who files as a single individual with an adjusted gross income of fifty thousand dollars ($50,000) or less for the taxable year prior to the calendar year in which the electric vehicle was purchased or the lease was entered into; 

(2) a taxpayer who files as a married individual filing a separate return with an adjusted gross income of thirty-seven thousand five hundred dollars ($37,500) or less for the taxable year prior to the calendar year in which the electric vehicle was purchased or the lease was entered into; or 

(3) a taxpayer who files as a head of household or surviving spouse, or taxpayers who file as married individuals filing a joint return, with an adjusted gross income of seventy-five thousand dollars ($75,000) or less for the taxable year prior to the calendar year in which the electric vehicle was purchased or the lease was entered into.

Reporting:

Requires a taxpayer allowed an Electric Vehicle Income Tax Credit to report the amount of the tax credit to the Taxation and Revenue Department on a form and in a manner required by the department. 

Requires the Taxation and Revenue Department to compile an annual report on the Electric Vehicle Income Tax Credit.

Requires the report to include the number of taxpayers approved by the department to 1) receive the tax credit, 2) the aggregate amount of tax credits approved, and 3) any other information necessary to evaluate the tax credit. 

Requires the Taxation and Revenue Department to compile and present the annual report to the Revenue Stabilization and Tax Policy Committee and the Legislative Finance Committee, with an analysis of the cost of the tax credit.

New Law:

SB58 enacts a new section of the Income Tax Act, titled: Electric Vehicle Charging Unit Income Tax Credit.

SB58 allows a taxpayer, for taxable years beginning prior to January 1, 2026, who is not a dependent of another individual and who purchases and installs an electric vehicle charging unit to claim a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act. 

Stipulation:

•	The Electric Vehicle Charging Unit Income Tax Credit will not exceed three hundred dollars ($300) or the cost to purchase and install an electric vehicle charging unit, whichever is less. 

Guidelines:

SB58 requires a taxpayer to apply for certification of eligibility for the Electric Vehicle Charging Unit Income Tax Credit from the department on forms and in the manner prescribed by the department. 

•	The aggregate amount of Electric Vehicle Charging Unit Income Tax Credits that may be certified as eligible in any calendar year is one million dollars ($1,000,000). 

Provides additional guidelines.

Reporting:

SB58 requires the Taxation and Revenue Department to compile an annual report on the Electric Vehicle Charging Unit Income Tax Credit that will include:

•	1) the number of taxpayers approved by the department to receive the tax credit, 2) the aggregate amount of tax credits approved, and 3) any other information necessary to evaluate the effectiveness of the tax credit. 

SB58 requires the Taxation and Revenue Department to present the annual report to the Revenue Stabilization and Tax Policy Committee and the Legislative Finance Committee, with an analysis of the effectiveness and cost of the tax credit and whether the tax credit is performing its purpose.

Definitions in this act:

(1) Electric Vehicle means a new motor vehicle that derives all or part of the vehicle's power from electricity stored in a battery that: 

•	(a) has a capacity of not less than six kilowatt-hours; (b) is capable of powering the vehicle for a range of at least fifteen miles; and (c) is capable of being recharged from an external source of electricity.

(2) Motor Vehicle means a vehicle with four wheels that: 

•	(a) is required under the Motor Vehicle Code to be registered in this state; 
•	(b) is made by a manufacturer; 
•	(c) has a base manufacturer suggested retail price, before options and destination charges, of forty-eight thousand dollars ($48,000) or less, before any taxes are imposed; 
•	(d) is manufactured primarily for use on public streets, roads or highways; 
•	(e) has not been modified from the original manufacturer specifications; 
•	(f) is rated at not less than two thousand two hundred pounds unloaded base weight and not more than nine thousand seven hundred fifty pounds unloaded base weight; and 
•	(g) has a maximum speed capability of at least sixty-five miles per hour.

(3) Plug-in Hybrid Electric Vehicle means a motor vehicle that derives part of the vehicle's power from electricity stored in a battery that: 

•	(a) has a capacity of not less than six kilowatt-hours; (b) is capable of powering the vehicle for a range of at least fifteen miles; and (c) is capable of being recharged from an external source of electricity.

(4) Electric Vehicle means a motor vehicle subject to the registration fee pursuant to Section 66-6-2 or 66-6-4 NMSA 1978, that derives all or part of the vehicle's power from electricity stored in a battery that: 

•	(a) has a capacity of not less than six kilowatt-hours; (b) is capable of powering the vehicle for a range of at least fifteen miles; and (c) is capable of being recharged from an external source of electricity.

(5) Electric Vehicle Charging Unit means a device that: 

•	(a) is used to provide electricity to an electric vehicle; (b) is designed to create a connection between an electricity source and the electric vehicle; (c) communicates with the electric vehicle's control system to ensure that electricity flows at an appropriate voltage and current level; and (d) is installed on residential property located in the state.

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