A proposal to create an electric vehicle tax credit is headed to the House floor after passing its second committee on Wednesday along party lines. HB 217 is one of two proposals for an EV tax credit, along with SB 2. The two bills are very similar but have key differences between them.
Democratic Rep. Jim Trujillo of Santa Fe presented HB 217 to the House Taxation and Revenue Committee. The bill would establish two personal income tax credits for New Mexicans: one for purchasing or leasing plug-in hybrid vehicles or 100 percent battery electric vehicles; and a second tax credit for installing charging infrastructure at the home. “My purpose was to get more electric cars to New Mexico,” Trujillo said. “Manufacturers are not sending cars to be sold here because other states have credits,” he added.
The bill would establish a $2,500 tax credit for residents whose annual income is above $50,000; but the tax credit jumps to $5,000 for residents who make less than $50,000. The bill would also establish a $300 income tax credit for the acquisition of a residential electric vehicle charging unit. Both tax credits would take effect this year, and would sunset in 2029. Residents registering EVs in the state would face an additional $50 fee, and those registering plug-in hybrids would be charged an additional $20 fee.
Trujillo told committee members that the SB 2 initially mirrored HB 217, but now the two bills diverge from one another. The Senate bill would end the tax credits in 2025, and would double registration fees to $100 for an EV and $50 for a plug-in hybrid, among other changes.
“The Senate completely changed it around,” Trujillo said. “In trying to negotiate with the Senate, I agreed to carry a substitute that mirrors what was in the Senate. But the Senate bill is still in [committee],” he said.
Trujillo briefly considered substituting the bill. Speaker of the House Brian Egolf said he had serious concerns about the Senate version of the bill.
“I would suggest we address the bill as is,” he said. “I don’t feel comfortable supporting the [Senate bill].”
Mesilla Democratic Rep. Micaela Lara Cadena, who is a co-sponsor of HB 217, said she also has problems with the Senate version.
“What is in that substitute, in my mind, basically eliminates the potential for low-income and moderate-income buyers to be in this market,” Cadena said.
Ultimately, Trujillo decided to pursue his own bill and dropped the substitute.
Rep. Jason Harper, R-Rio Rancho, and other Republicans on the committee argued that the proposed personal income tax credits were unnecessary.
“This electric economy is moving, it’s growing. They’re becoming more affordable,” Harper said. “I don’t really see a need to incentivize, through the personal income tax, people buying these cars.”
“I also have big concerns about poking more holes in our tax code,” Harper said. “Our gross receipts tax is a disaster, our income tax is starting to get that way. I worry about the cost of this, who does it benefit, and is it really needed.”
Trujillo said he’d be happy to take amendments before the bill goes to the floor.
“I believe there are some technical things that need to get worked out,” said Rep. Javier Martinez, D-Albuquerque, who co-chairs the committee with Trujillo. “Outside of that, I think there will be a robust policy discussion about whether or not we should let the market dictate, or we should incentivize. I predict that’s going to be a three-hour floor debate. I don’t want to hold this up.”
The bill passed 8-4, with no Republican support. It heads to the House floor next.
SB 2, on the other hand, is awaiting consideration in the Senate Finance Committee. Trujillo said he doesn’t think the Senate bill will advance out of committee before the session ends next week.