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Combined Heat and Power Partnership

Biomass Equipment & Materials Compensating Tax Deduction

dCHPP Glossary (PDF) (2 pp, 53K)

Date Last Updated11/16/2012
Incentive TypeTax
Incentive Administrator/Contact OfficeNew Mexico Taxation & Revenue Department
Incentive Initiation Date6/17/2005
Incentive Size and Funding SourceIn 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 RecipientOwners of businesses involved with biomass equipment or biomass materials.
Eligible FuelDoes Not Specify
Eligible Project Size (MW)Does Not Specify
Minimum Efficiency Required (%)Does Not Specify
Other Incentive DetailsCompensating 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.
Resource Website(s) http://programs.dsireusa.org/system/program/detail/359 exit EPA

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