Solar & Battery Regulation & Incentive Programs

Biomass Equipment & Materials Compensating Tax Deduction

Program Overview


Category:
Financial Incentive
Program Type:
Sales Tax Incentive
Implementing Sector:
State
State:
New Mexico
Eligible Storage Technologies:
Biomass, Hydrogen, Municipal Solid Waste, Combined Heat & Power, Landfill Gas, Anaerobic Digestion, Microturbines
Incentive Amount:
100% of value may be deducted for purposes of calculating Compensating Tax due
Administrator:
New Mexico Taxation & Revenue Department
Applicable Sectors:
Commercial, Industrial
Start Date:
06/17/2005
Last Updated:
07/31/2020

Summary

In 2005, New Mexico adopted a policy to allow businesses to deduct the value of biomass equipment and biomass materials used for the processing of biopower, biofuels, or biobased products in determining the amount of Compensating Tax due.

New Mexico's Compensating Tax is an excise, or "use" tax, which is typically levied on the purchaser of the product or service for using tangible property in the state. The tax applies to imports of factory and office equipment, and other items. The rate is 5.125% on certain property used in New Mexico and 5% on certain services used in New Mexico. Compensating Tax is designed to protect New Mexico businesses from unfair competition from out-of-state business not subject to a sales or gross receipts tax. This biomass Compensating Tax deduction is analogous to a sales tax exemption for renewable energy equipment available in some other states.

Deductions from compensating tax do not have to be reported to the New Mexico Taxation and Revenue Department but records substantiating the deduction should be kept in the taxpayer's records.


Authorities

NameEnacted DateEffective DateExpired Date
NM Stat. § 7-9-9804/05/200506/17/2005