Bill proposes tax credits for energy storage
A bill that would allow people to receive tax credits if they install battery storage systems in their homes or businesses was tabled on an interim basis by the House Taxation and Revenue Committee on Wednesday, although it could later be partially included in a larger tax package budget.
The legislation — sponsored by Rep. Debra Sariñana, D-Albuquerque, Sen. Mimi Stewart, D-Albuquerque, and Rep. Tara Lujan, D-Santa Fe — was previously passed by the House Energy, Environment and Natural Resources Committee by a 6-4 vote passes party line vote.
The bill does not necessarily mean the bill is dead, as is often the case in other committees. The House Taxation and Revenue Committee reviews proposed tax credits and temporarily fixes anything with tax implications. At the end of the meeting, the committee then reviews these proposed tax credits and creates a tax package based on what is in the budget.
“If we pass everything here, the teachers won’t get paid because the money goes to tax credits instead of paying their salaries,” Rep. Jason Harper, R-Rio Rancho, said during the committee meeting.
He said about $1 billion in tax credits are proposed each year.
“If we submit a bill, it doesn’t mean we don’t like it,” he said.
HB 32 proposes a tax credit of up to 40 percent of equipment and installation costs for stationary energy storage systems installed on residential, commercial, or agricultural properties. This tax credit would expire in 2028. The maximum tax credit would be $5,000 for residential property or $150,000 for commercial or agricultural property.
The energy storage system must also be connected to a new or existing photovoltaic system and be able to store energy for at least two hours.
HB 32 isn’t the first time lawmakers have attempted to create a tax credit for energy storage systems. Legislatures have introduced similar legislation in the last three regular legislatures.
Proponents say such legislation is needed to support the clean energy transition by making it easier for people to afford battery storage.
But some say the tax credit would only benefit people with money, not low-income households, as the cost of energy storage remains prohibitive.
Homeowners would still have to pay for battery storage upfront and receive some reimbursement later in the form of tax credits.
Lawmakers also raised concerns about tax credit refunds. Refundable tax credits are rare in New Mexico and are usually given to help low-income people.
A refundable tax credit allows the taxpayer to get the money even if the credit is more than the amount of tax they owe. For example, if someone owed $1,000 in taxes and was eligible for a $5,000 refundable tax credit, they could receive a $4,000 refund. If the tax credit were non-refundable, it would only offset the $1,000 the person owed.
The proposed state tax credits would also come about a year after federal legislation created a 30 percent tax credit for energy storage systems.
