Combined Heat and Power Partnership
Biomass Equipment & Materials Compensating Tax Deduction
| Date Last Updated | 11/16/2012 |
| Incentive Type | Tax |
| State/Federal | NM |
| Incentive Administrator/Contact Office | New Mexico Taxation & Revenue Department |
| Incentive Initiation Date | 6/17/2005 |
| Incentive Size and Funding Source | 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. This biomass Compensating Tax deduction is analogous to a sales tax exemption for renewable energy equipment available in some other states. |
| Eligible Recipient | Owners of businesses involved with biomass equipment or biomass materials. |
| Eligible Fuel | Does Not Specify |
| Eligible Project Size (MW) | Does Not Specify |
| Minimum Efficiency Required (%) | Does Not Specify |
| Other Incentive Details | 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. Deductions from compensating tax do not have to be reported to the NM Taxation and Revenue Department but records substantiating the deduction should be kept in the taxpayer's records. |
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