Summary:

 House Bill 545 (HB 545) establishes the Gas and Electric Bill Income Tax Credit, allowing eligible residents to claim a refundable tax credit equal to 50% of their annual natural gas and electric utility bills for their primary residence. The credit applies to taxable years beginning on or after January 1, 2025. Taxpayers must obtain certification of eligibility from the Public Regulation Commission, which will verify that the taxpayer meets the requirements and issue certificates indicating the amount of the credit. 

Legislation Overview:

 House Bill 545 (HB 545) creates a refundable income tax credit for New Mexico residents who pay for natural gas or electric services at their primary residence. The credit equals 50% of the total amount billed for these services within the taxable year. To claim the credit, taxpayers must first apply for certification from the Public Regulation Commission, which will determine eligibility and issue certificates specifying the credit amount. The commission is responsible for providing electronic reports to the Taxation and Revenue Department to track issued credits.

The credit is refundable, meaning that if the credit amount exceeds a taxpayer’s income tax liability, the excess will be refunded. Married taxpayers filing separately may each claim half of the credit available to them if they had filed jointly. The credit must be claimed within one taxable year following the end of the year in which the Public Regulation Commission certifies the credit. HB 545 also mandates that the Taxation and Revenue Department include the credit in the tax expenditure budget and report on its total annual cost. The bill applies to taxable years beginning on or after January 1, 2025.

Implications

HB 545 provides financial relief to households by offsetting the cost of gas and electric utilities through the tax credit. The refundability of the credit ensures that low-income households with little or no income tax liability can still benefit. By requiring certification from the Public Regulation Commission, the bill introduces an administrative process to verify eligibility and prevent fraudulent claims, but this may also create application backlogs or delays in processing.

The fiscal impact of the credit will depend on the number of eligible residents and the total amount of certified credits issued. Since the credit covers 50% of gas and electric bills, the total cost to the state could be significant, particularly if utility rates rise. The provision requiring inclusion in the tax expenditure budget ensures legislative oversight and accountability, allowing policymakers to assess the financial impact of the credit over time.

The bill does not establish an income limit, meaning all qualifying residents, regardless of financial status, may claim the credit. This broad eligibility could raise concerns about whether the policy effectively targets those most in need of financial assistance. The requirement for taxpayers to obtain certification from the Public Regulation Commission adds an additional step in the process, which may create accessibility challenges for some residents, particularly those unfamiliar with government procedures.
 

Current Law:

 Under current law, no tax credit exists to offset the cost of residential gas and electric services in New Mexico. Utility costs are generally borne entirely by consumers, with financial assistance available only through programs such as the Low-Income Home Energy Assistance Program, which provides direct subsidies rather than tax credits.