1. A. A taxpayer who files an individual New Mexico income tax return for a taxable year beginning on or after January 1, 2024 and who purchases and installs after May 15, 2024 but before December 31, 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 certified pursuant to Subsection C of this section and installed by a nationally accredited ground source heat pump installer.
2. B. That portion of a geothermal ground-coupled heat pump income tax credit that exceeds a taxpayer's tax liability in the taxable year in which the credit is claimed shall be refunded to the taxpayer.
3. C. 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.
4. D. The maximum annual aggregate of credits that may be certified in a calendar year by the energy, minerals and natural resources department is four million dollars ($4,000,000). That department shall not certify a tax credit for which a taxpayer 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. Completed applications for the credit shall be considered in the order received. The energy, minerals and natural resources department shall provide the department appropriate information for all certificates of eligibility in a secure manner on regular intervals agreed upon by both departments.
5. 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.
6. F. 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.
7. G. A taxpayer allowed a tax credit pursuant to this section shall claim the credit on forms and in a manner required by the department.
8. H. The 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.
9. I. As used in this section, "geothermal ground-coupled heat pump" means a 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.

History: Laws 2009, ch. 271, § 1; 2024, ch. 67, § 25; 2025, ch. 130, § 41.

ANNOTATIONS

The 2025 amendment, effective January 1, 2026, revised reporting requirements regarding the geothermal ground-coupled heat pump income tax credit, and clarified certain language; in Subsection A, after "installs after" deleted "the effective date of this section" and added "May 15, 2024", after "ground source heat pump installer" deleted "certified by the energy, minerals and natural resources department"; in Subsection D, after "the order received" deleted "by the department" and added the remainder of the subsection; in Subsection G, after "shall" deleted "report the amount of the credit to the department" and added "claim the credit on forms and"; and in Subsection H, after the subsection designation, deleted "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" and added "The 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".

The 2024 amendment, effective May 15, 2024, reinstated the geothermal ground-coupled heat pump income tax credit, increased the maximum amount of the credit from two million dollars to four million dollars, required the taxation and revenue department to compile an annual report on the geothermal ground-coupled heat pump income tax credit, and revised the definition of "geothermal ground-coupled heat pump"; in the section heading, added "income" preceding "tax credit"; in Subsection A, after "January 1,", changed "2010" to "2024", after "installs after", deleted "January 1, 2010" and added "the effective date of this section", after "December 31,", changed "2020" to "2034", and after "only for geothermal ground-coupled heat pumps", added "that are installed by a nationally accredited ground source heat pump installer"; in Subsection B, after "tax credit that", deleted "remains unused in a" and added "exceeds a taxpayer's tax liability in the", and after "taxable year", deleted "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" and added "in which the credit is claimed shall be refunded to the taxpayer"; in Subsection C, deleted "Prior to July 1, 2010"; in Subsection D, after "maximum annual aggregate of", deleted "two million dollars ($2,000,000) in geothermal ground-coupled heat pump tax", after "credits", added "that may be certified in a calendar year by the energy, minerals and natural resources department is four million dollars ($4,000,000). That department shall not certify a tax credit for which a taxpayer 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"; in Subsection F, deleted "A husband and wife" and added "Married individuals"; added new Subsections G and H and redesignated former Subsection G as Subsection I; and in Subsection I, after "means a", deleted "system that uses energy from the ground, water or, ultimately, the sun for distribution of heating, cooling or domestic hot water" and added "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", and after "sixteen or greater", deleted "and that is installed by an accredited installer certified by the international ground source heat pump association".

Applicability. — Laws 2024, ch. 67, § 42 provided that the provisions of Laws 2024, ch. 67, §§ 7, 9 and 23 through 31 apply to taxable years beginning on or after January 1, 2024.