ADVANCED ENERGY PRODUCT DEFINITION

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AN ACT
RELATING TO TAXATION; AMENDING THE DEFINITION OF "ADVANCED
ENERGY PRODUCT" IN THE ADVANCED ENERGY EQUIPMENT INCOME TAX
CREDIT AND THE ADVANCED ENERGY EQUIPMENT CORPORATE INCOME TAX
CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-2-18.39 NMSA 1978 (being Laws
2024, Chapter 67, Section 35) is amended to read:
"7-2-18.39. ADVANCED ENERGY EQUIPMENT INCOME TAX
CREDIT.--
A. The tax credit provided by this section may be
referred to as the "advanced energy equipment income tax
credit". A taxpayer who is not a dependent of another
individual, who makes qualified expenditures for a qualified
manufacturing facility located in New Mexico and who files an
individual New Mexico income tax return for a taxable year
beginning on or after January 1, 2025, and prior to January
1, 2033, may claim the tax credit in the amount provided in
Subsection B of this section.
B. The amount of the tax credit shall be in an
amount equal to the lesser of twenty percent of the amount of
the qualified expenditures made by the taxpayer for a
qualified manufacturing facility or twenty-five million
dollars ($25,000,000).
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C. Prior to incurring a qualified expenditure, a
taxpayer shall apply for preliminary certification of
eligibility for the tax credit from the energy, minerals and
natural resources department on forms and in the manner
prescribed by that department. Such preliminary
certification shall be made in consultation with the economic
development department and shall be limited to confirming
that the qualified expenditures proposed to be made by the
taxpayer will in whole or in part be used to produce advanced
energy products and providing an estimate of the amount of
tax credit for which the taxpayer may be eligible. Only one
certificate of eligibility shall be issued for all activities
performed at a qualified manufacturing facility, regardless
of ownership of the facility.
D. Within twelve months of commencement of
production of any advanced energy product, the taxpayer shall
seek final certification from the energy, minerals and
natural resources department. The total annual aggregate
amount of advanced energy equipment income tax credits and
advanced energy equipment corporate income tax credits that
may be certified in a calendar year shall not exceed twenty-
five million dollars ($25,000,000). An application for final
certification shall include information required by the
energy, minerals and natural resources department to
determine eligibility for the tax credit, including
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information substantiating qualified expenditures. If, after
consultation with the economic development department, the
energy, minerals and natural resources department determines
that the taxpayer meets the requirements of this section, the
energy, minerals and natural resources department shall issue
a dated certificate of eligibility to the taxpayer providing
the amount of tax credit for which the taxpayer is eligible
and the taxable years in which the credit may be claimed.
The energy, minerals and natural resources department shall
provide the department with the certificates of eligibility
issued pursuant to this subsection in an electronic format at
regularly agreed-upon intervals. A certificate of
eligibility for the tax credit may be sold, exchanged or
otherwise transferred to another taxpayer in increments of
not less than one million dollars ($1,000,000); provided that
if the total amount certified is less than one million
dollars ($1,000,000), the certificate of the entire amount of
the credit may be transferred. 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
in an electronic format prescribed by the department.
E. A taxpayer allowed to claim the tax credit
shall claim the credit in a manner required by the
department. The tax credit shall be claimed within one year
of receiving final certification from the energy, minerals
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and natural resources department. The taxpayer shall claim
the amount certified and approved against the taxpayer's
income tax liabilities. Any amount of credit that exceeds
the taxpayer's income tax liabilities may be carried forward
for five consecutive taxable years. A taxpayer who claims
the tax credit shall report to the department and the energy,
minerals and natural resources department on the continued
operations of the qualified manufacturing facility.
F. 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 tax credit that would
have been claimed on a joint return.
G. A taxpayer may be allocated the right to claim
the tax credit in a 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.
H. If the taxpayer or a successor in the business
of the taxpayer ceases operations at the qualifying
manufacturing facility or ceases to produce advanced energy
products for at least one hundred eighty days within a two-
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year period after the taxpayer has claimed the tax credit,
any amount of credit that received final certification with
respect to that facility that is not claimed against a
taxpayer's tax liability shall be extinguished, and within
thirty days after the one hundred eightieth day of cessation
of operations, the taxpayer who received final certification
pursuant to Subsection D of this section shall pay to the
department the tax liability against which the certified
credit was claimed. For the purposes of this section, a
taxpayer shall not be deemed to have ceased operations during
reasonable periods for maintenance or retooling, for the
repair or replacement of facilities damaged or destroyed or
during labor disputes.
I. The tax credit provided by this section shall
be included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the annual aggregate cost of the
tax credit.
J. As used in this section:
(1) "advanced energy product" means:
(a) a solar energy component, including
a solar module, photovoltaic cell, photovoltaic wafer, solar-
grade polysilicon, torque tube, structural fastener or
polymeric backsheet;
(b) a wind energy component, including
a wind turbine blade, nacelle and tower;
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(c) a battery component, including an
electrode-active material, a battery cell and a battery
module;
(d) a fusion machine and the components
of a fusion machine that can transform atomic nuclei through
fusion processes into different elements, isotopes or other
particles, including associated systems essential to
facilitate fusion processes;
(e) a critical mineral, if converted or
purified to specified purities or forms, including aluminum,
antimony, arsenic, barite, bismuth, cerium, cesium, chromium,
cobalt, dysprosium, erbium, europium, fluorspar, gadolinium,
gallium, germanium, graphite, hafnium, holmium, indium,
iridium, lanthanum, lithium, lutetium, magnesium, manganese,
neodymium, nickel, niobium, palladium, platinum,
praseodymium, rhodium, rubidium, ruthenium, samarium,
tantalum, tellurium, terbium, thulium, tin, titanium,
tungsten, vanadium, ytterbium, yttrium, zinc and zirconium;
and
(f) an inverter that is an end product,
which is suitable to convert direct current energy from one
or more solar module or certified distributed wind energy
systems into alternating current electricity, including a
central inverter, commercial inverter, distributed wind
inverter, microinverter, residential inverter or utility
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inverter;
(2) "essential" means directly necessary to
the production of an advanced energy product;
(3) "manufacturing equipment" means an
essential machine, mechanism or tool or a component of an
essential machine, mechanism or tool used directly and
exclusively in a taxpayer's qualified manufacturing facility
and that is subject to depreciation pursuant to the Internal
Revenue Code by the taxpayer carrying on the manufacturing.
"Manufacturing equipment" does not include a vehicle that
leaves the site of a manufacturing operation for the purpose
of transporting persons or property, including property for
which the taxpayer claims a credit pursuant to Section 7-9-79
NMSA 1978;
(4) "qualified expenditure" means an
expenditure made on or after January 1, 2025 and prior to
January 1, 2033 for the purchase of that portion of the costs
of manufacturing equipment dedicated to manufacturing
advanced energy products; and
(5) "qualified manufacturing facility" means
a facility located in New Mexico, including any connected,
associated or subsidiary facilities, that employs personnel
to perform production tasks with manufacturing equipment not
previously existing at the facility to produce advanced
energy products."
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SECTION 2. Section 7-2A-19.3 NMSA 1978 (being Laws
2024, Chapter 67, Section 36) is amended to read:
"7-2A-19.3. ADVANCED ENERGY EQUIPMENT CORPORATE INCOME
TAX CREDIT.--
A. The tax credit provided by this section may be
referred to as the "advanced energy equipment corporate
income tax credit". A taxpayer that makes qualified
expenditures for a qualified manufacturing facility located
in New Mexico and that files a corporate income tax return
for a taxable year beginning on or after January 1, 2025, and
prior to January 1, 2033, may claim the tax credit in the
amount provided in Subsection B of this section.
B. The amount of the tax credit shall be in an
amount equal to the lesser of twenty percent of the amount of
the qualified expenditures made by the taxpayer for a
qualified manufacturing facility or twenty-five million
dollars ($25,000,000).
C. Prior to incurring a qualified expenditure, a
taxpayer shall apply for preliminary certification of
eligibility for the tax credit from the energy, minerals and
natural resources department on forms and in the manner
prescribed by that department. Such preliminary
certification shall be made in consultation with the economic
development department and shall be limited to confirming
that the qualified expenditures proposed to be made by the
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taxpayer will in whole or in part be used to produce advanced
energy products and providing an estimate of the amount of
tax credit for which the taxpayer may be eligible. Only one
certificate of eligibility shall be issued for all activities
performed at a qualified manufacturing facility, regardless
of ownership of the facility.
D. Within twelve months of commencement of
production of any advanced energy product, the taxpayer shall
seek final certification from the energy, minerals and
natural resources department. The total annual aggregate
amount of advanced energy equipment corporate income tax
credits and advanced energy equipment income tax credits that
may be certified in a calendar year shall not exceed twenty-
five million dollars ($25,000,000). An application for final
certification shall include information required by the
energy, minerals and natural resources department to
determine eligibility for the tax credit, including
information substantiating qualified expenditures. If, after
consultation with the economic development department, the
energy, minerals and natural resources department determines
that the taxpayer meets the requirements of this section, the
energy, minerals and natural resources department shall issue
a dated certificate of eligibility to the taxpayer providing
the amount of tax credit for which the taxpayer is eligible
and the taxable years in which the credit may be claimed.
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The energy, minerals and natural resources department shall
provide the department with the certificates of eligibility
issued pursuant to this subsection in an electronic format at
regularly agreed-upon intervals. A certificate of
eligibility for the tax credit may be sold, exchanged or
otherwise transferred to another taxpayer in increments of
not less than one million dollars ($1,000,000); provided that
if the total amount certified is less than one million
dollars ($1,000,000), a certificate of the entire amount of
the credit may be transferred. 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
in an electronic format prescribed by the department.
E. A taxpayer allowed to claim the tax credit
shall claim the credit in a manner required by the
department. The tax credit shall be claimed within one year
of receiving final certification from the energy, minerals
and natural resources department. The taxpayer shall claim
the amount certified and approved against the taxpayer's
corporate income tax liabilities. Any amount of credit that
exceeds the taxpayer's corporate income tax liabilities may
be carried forward for five consecutive taxable years. A
taxpayer that claims the tax credit shall report to the
department and the energy, minerals and natural resources
department on the continued operations of the qualified
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manufacturing facility.
F. If the taxpayer or a successor in the business
of the taxpayer ceases operations at the qualifying
manufacturing facility or ceases to produce advanced energy
products for at least one hundred eighty days within a two-
year period after the taxpayer has claimed the tax credit,
any amount of credit that received final certification with
respect to that facility that is not claimed against a
taxpayer's tax liability shall be extinguished, and within
thirty days after the one hundred eightieth day of cessation
of operations, the taxpayer that received final certification
pursuant to Subsection D of this section shall pay to the
department the tax liability against which the certified
credit was claimed. For the purposes of this section, a
taxpayer shall not be deemed to have ceased operations during
reasonable periods for maintenance or retooling, for the
repair or replacement of facilities damaged or destroyed or
during labor disputes.
G. The tax credit provided by this section shall
be included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the annual aggregate cost of the
tax credit.
H. As used in this section:
(1) "advanced energy product" means:
(a) a solar energy component, including
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a solar module, photovoltaic cell, photovoltaic wafer, solar-
grade polysilicon, torque tube, structural fastener or
polymeric backsheet;
(b) a wind energy component, including
a wind turbine blade, nacelle and tower;
(c) a battery component, including an
electrode-active material, a battery cell and a battery
module;
(d) a fusion machine and the components
of a fusion machine that can transform atomic nuclei through
fusion processes into different elements, isotopes or other
particles, including associated systems essential to
facilitate fusion processes;
(e) a critical mineral, if converted or
purified to specified purities or forms, including aluminum,
antimony, arsenic, barite, bismuth, cerium, cesium, chromium,
cobalt, dysprosium, erbium, europium, fluorspar, gadolinium,
gallium, germanium, graphite, hafnium, holmium, indium,
iridium, lanthanum, lithium, lutetium, magnesium, manganese,
neodymium, nickel, niobium, palladium, platinum,
praseodymium, rhodium, rubidium, ruthenium, samarium,
tantalum, tellurium, terbium, thulium, tin, titanium,
tungsten, vanadium, ytterbium, yttrium, zinc and zirconium;
and
(f) an inverter that is an end product,
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which is suitable to convert direct current energy from one
or more solar module or certified distributed wind energy
systems into alternating current electricity, including a
central inverter, commercial inverter, distributed wind
inverter, microinverter, residential inverter or utility
inverter;
(2) "essential" means directly necessary to
the production of an advanced energy product;
(3) "manufacturing equipment" means an
essential machine, mechanism or tool or a component of an
essential machine, mechanism or tool used directly and
exclusively in a taxpayer's qualified manufacturing facility
and that is subject to depreciation pursuant to the Internal
Revenue Code by the taxpayer carrying on the manufacturing.
"Manufacturing equipment" does not include a vehicle that
leaves the site of a manufacturing operation for the purpose
of transporting persons or property, including property for
which the taxpayer claims a credit pursuant to Section 7-9-79
NMSA 1978;
(4) "qualified expenditure" means an
expenditure made on or after January 1, 2025 and prior to
January 1, 2033 for the purchase of that portion of the costs
of manufacturing equipment dedicated to manufacturing
advanced energy products; and
(5) "qualified manufacturing facility" means
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a facility located in New Mexico, including any connected,
associated or subsidiary facilities, that employs personnel
to perform production tasks with manufacturing equipment not
previously existing at the facility to produce advanced
energy products."
SECTION 3. APPLICABILITY.--The provisions of this act
apply to taxable years beginning on or after January 1, 2026.