1 STATE OF OKLAHOMA
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2 1st Session of the 59th Legislature (2023)
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3 SENATE BILL 605 By: Rader
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6 AS INTRODUCED
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7 An Act relating to income tax credit; amending 68
7 O.S. 2021, Section 2357.22, as amended by Section 1,
8 Chapter 404, O.S.L. 2022 (68 O.S. Supp. 2022, Section
8 2357.22), which relates to one-time credit for
9 investments in qualified clean-burning motor vehicle
9 fuel property; modifying certain required calculation
10 by the Oklahoma Tax Commission for certain fiscal
10 years; providing an effective date; and declaring an
11 emergency.
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14 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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15 SECTION 1. AMENDATORY 68 O.S. 2021, Section 2357.22, as
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16 amended by Section 1, Chapter 404, O.S.L. 2022 (68 O.S. Supp. 2022,
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17 Section 2357.22), is amended to read as follows:
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18 Section 2357.22. A. For tax years 2028 and before, there shall
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19 be allowed a one-time credit against the income tax imposed by
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20 Section 2355 of this title for investments in qualified clean-
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21 burning motor vehicle fuel property placed in service on or after
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22 January 1, 1991.
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23 B. As used in this section, “qualified clean-burning motor
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24 vehicle fuel property” means:
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 1 1. Equipment installed to modify a motor vehicle which is
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2 propelled by gasoline or diesel fuel so that the vehicle may be
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3 propelled by compressed natural gas, liquefied natural gas, or
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4 liquefied petroleum gas. The equipment covered by this paragraph
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5 must:
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6 a. be new, not previously used to modify or retrofit any
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7 vehicle propelled by gasoline or diesel fuel and be
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8 installed by an alternative fuels equipment technician
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9 who is certified in accordance with the Alternative
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10 Fuels Technician Certification Act,
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11 b. meet all Federal Motor Vehicle Safety Standards set
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12 forth in 49 CFR 571, or
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13 c. for any commercial motor vehicle (CMV), follow the
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14 Federal Motor Carrier Safety Regulations or Oklahoma
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15 Intrastate Motor Carrier Regulations;
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16 2. A motor vehicle originally equipped so that the vehicle may
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17 be propelled by compressed natural gas, or liquefied natural gas or
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18 liquefied petroleum gas but only to the extent of the portion of the
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19 basis of such motor vehicle which is attributable to the storage of
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20 such fuel, the delivery to the engine of such motor vehicle of such
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21 fuel, and the exhaust of gases from combustion of such fuel;
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22 3. Property, not including a building and its structural
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23 components, which is:
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 1 a. directly related to the delivery of compressed natural
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2 gas, liquefied natural gas or liquefied petroleum gas,
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3 or hydrogen for commercial purposes or for a fee or
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4 charge, into the fuel tank of a motor vehicle
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5 propelled by such fuel including compression equipment
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6 and storage tanks for such fuel at the point where
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7 such fuel is so delivered but only if such property is
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8 not used to deliver such fuel into any other type of
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9 storage tank or receptacle and such fuel is not used
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10 for any purpose other than to propel a motor vehicle,
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11 or
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12 b. a metered-for-fee, public access recharging system for
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13 motor vehicles propelled in whole or in part by
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14 electricity. The property covered by this paragraph
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15 must be new, and must not have been previously
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16 installed or used to refuel vehicles powered by
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17 compressed natural gas, liquefied natural gas or
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18 liquefied petroleum gas, hydrogen, or electricity.
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19 Any property covered by this paragraph which is related to the
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20 delivery of hydrogen into the fuel tank of a motor vehicle shall
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21 only be eligible for tax years 2010 and 2023 through 2028;
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22 4. Property which is directly related to the compression and
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23 delivery of natural gas from a private home or residence, for
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24 noncommercial purposes, into the fuel tank of a motor vehicle
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 1 propelled by compressed natural gas. The property covered by this
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2 paragraph must be new and must not have been previously installed or
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3 used to refuel vehicles powered by natural gas; or
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4 5. For tax years 2010 and 2023 through 2028, a motor vehicle
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5 originally equipped so that the vehicle may be propelled by a
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6 hydrogen fuel cell electric fueling system.
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7 C. As used in this section, “motor vehicle” means a motor
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8 vehicle originally designed by the manufacturer to operate lawfully
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9 and principally on streets and highways.
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10 D. The credit provided for in subsection A of this section
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11 shall be as follows:
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12 1. For the qualified clean-burning motor vehicle fuel property
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13 defined in paragraphs 1, 2, or 5 of subsection B of this section,
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14 the amount of the credit shall be as follows based upon gross
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15 vehicle weight of the qualified vehicle:
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16 a. for vehicles up to or below six thousand (6,000)
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17 pounds, the credit shall be a maximum of Five Thousand
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18 Five Hundred Dollars ($5,500.00),
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19 b. for vehicles between six thousand one (6,001) pounds
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20 to ten thousand (10,000) pounds, the credit shall be a
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21 maximum amount of Nine Thousand Dollars ($9,000.00),
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22 c. for vehicles of ten thousand one (10,001) pounds, but
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23 not in excess of twenty-six thousand five hundred
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 1 (26,500) pounds, the credit shall be a maximum amount
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2 of Twenty-six Thousand Dollars ($26,000.00), and
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3 d. for vehicles in excess of twenty-six thousand five
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4 hundred one (26,501) pounds, the credit shall be a
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5 maximum amount of One Hundred Thousand Dollars
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6 ($100,000.00);
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7 2. For qualified clean-burning motor vehicle fuel property
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8 defined in paragraph 3 of subsection B of this section, a per-
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9 location credit of forty-five percent (45%) of the cost of the
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10 qualified clean-burning motor vehicle fuel property; and
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11 3. For qualified clean-burning motor vehicle fuel property
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12 defined in paragraph 4 of subsection B of this section, a per-
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13 location credit of the lesser of fifty percent (50%) of the cost of
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14 the qualified clean-burning motor vehicle fuel property or Two
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15 Thousand Five Hundred Dollars ($2,500.00).
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16 E. In cases where no credit has been claimed pursuant to
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17 paragraph 1 of subsection D of this section by any prior owner and
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18 in which a motor vehicle is purchased by a taxpayer with qualified
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19 clean-burning motor vehicle fuel property installed by the
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20 manufacturer of such motor vehicle and the taxpayer is unable or
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21 elects not to determine the exact basis which is attributable to
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22 such property, the taxpayer may claim a credit in an amount not
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23 exceeding the lesser of ten percent (10%) of the cost of the motor
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24 vehicle or One Thousand Five Hundred Dollars ($1,500.00).
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 1 F. If the tax credit allowed pursuant to subsection A of this
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2 section exceeds the amount of income taxes due or if there are no
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3 state income taxes due on the income of the taxpayer, the amount of
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4 the credit not used as an offset against the income taxes of a
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5 taxable year may be carried forward, in order, as a credit against
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6 subsequent income tax liability for a period not to exceed five (5)
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7 years. The tax credit authorized pursuant to the provisions of this
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8 section shall not be used to reduce the tax liability of the
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9 taxpayer to less than zero (0).
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10 G. A husband and wife who file separate returns for a taxable
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11 year in which they could have filed a joint return may each claim
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12 only one-half (1/2) of the tax credit that would have been allowed
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13 for a joint return.
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14 H. The Oklahoma Tax Commission is herein empowered to
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15 promulgate rules by which the purpose of this section shall be
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16 administered including the power to establish and enforce penalties
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17 for violations thereof.
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18 I. Notwithstanding the provisions of Section 2352 of this
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19 title, for the fiscal year beginning on July 1, 2014, and each
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20 fiscal year thereafter through fiscal year 2023, the Tax Commission
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21 shall calculate an amount that equals five percent (5%) of the cost
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22 of qualified clean-burning motor vehicle fuel property as provided
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23 for in paragraph 1 of subsection D of this section for tax year
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24 2012. For each subsequent fiscal year thereafter, the Tax
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 1 Commission shall perform the same computation with respect to the
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2 second tax year preceding the beginning of each subsequent fiscal
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3 year. For fiscal year 2024, the Tax Commission shall calculate an
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4 amount that equals twelve percent (12%) of the credit for qualified
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5 clean-burning motor vehicle fuel property as provided in paragraph 1
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6 of subsection D of this section for tax year 2021. For each
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7 subsequent fiscal year, the Tax Commission shall perform the same
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8 calculation for credits claimed in the second preceding tax year.
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9 The Tax Commission shall then transfer an amount equal to the amount
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10 calculated in this subsection from the revenue derived pursuant to
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11 the provisions of subsections A, B and E of Section 2355 of this
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12 title to the Compressed Natural Gas Conversion Safety and Regulation
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13 Fund created in Section 130.25 of Title 74 of the Oklahoma Statutes.
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14 J. For the tax years 2020 through 2022, the total amount of
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15 credits authorized by this section used to offset tax shall be
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16 adjusted annually to limit the annual amount of credits to Twenty
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17 Million Dollars ($20,000,000.00). The Tax Commission shall annually
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18 calculate and publish by the first day of the affected taxable year
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19 a percentage by which the credits authorized by this section shall
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20 be reduced so the total amount of credits used to offset tax does
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21 not exceed Twenty Million Dollars ($20,000,000.00) per year. The
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22 formula to be used for the percentage adjustment shall be Twenty
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23 Million Dollars ($20,000,000.00) divided by the credits claimed in
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 1 the second preceding year, with respect to any changes to the future
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2 of the credit.
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3 K. Pursuant to subsection J of this section, in the event the
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4 total tax credits authorized by this section exceed Twenty Million
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5 Dollars ($20,000,000.00) in any calendar year, the Tax Commission
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6 shall permit any excess over Twenty Million Dollars ($20,000,000.00)
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7 but shall factor such excess into the percentage adjustment formula
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8 for subsequent years with respect to any changes to the future of
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9 the credit.
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10 L. For the tax years 2023 through 2028, the total amount of
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11 credits authorized by this section used to offset tax shall be
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12 adjusted annually to limit the annual amount of credits to:
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13 1. Ten Million Dollars ($10,000,000.00) for qualified clean
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14 burning fuel property propelled by compressed natural gas, liquefied
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15 natural gas, or liquefied petroleum gas, property related to the
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16 delivery of compressed natural gas, liquefied natural gas or
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17 liquefied petroleum gas, and property directly related to the
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18 compression and delivery of natural gas;
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19 2. Ten Million Dollars ($10,000,000.00) for property originally
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20 equipped so that the vehicle may be propelled by a hydrogen fuel
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21 cell electric fueling system and property directly related to the
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22 delivery of hydrogen; and
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 1 3. Ten Million Dollars ($10,000,000.00) for property which is a
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2 metered-for-fee, public access recharging system for motor vehicles
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3 propelled in whole or in part by electricity.
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4 The Tax Commission shall annually calculate and publish by the
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5 first day of the affected taxable year a percentage by which the
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6 credits authorized by this section shall be reduced so the total
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7 amount of credits used to offset tax does not exceed each of the
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8 limits provided in paragraphs 1 through 3 of this subsection. The
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9 formula to be used for the percentage adjustment shall be Ten
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10 Million Dollars ($10,000,000.00) divided by the credits claimed in
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11 the second preceding year, with respect to any changes to the future
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12 of the credit.
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13 M. Pursuant to subsection L of this section, in the event the
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14 tax credits authorized by this section exceed any of the limits
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15 provided in paragraphs 1 through 3 of subsection L of this section
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16 in any year, the Tax Commission shall permit any excess over Ten
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17 Million Dollars ($10,000,000.00) but shall factor such excess into
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18 the percentage adjustment formula for subsequent years with respect
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19 to any changes to the future of the credit.
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20 N. The Tax Commission shall notify the Office of the State
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21 Secretary of Energy and Environment at any time when the amount of
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22 claims for credits allowed pursuant to this section reaches eighty
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23 percent (80%) of the total annual limit provided in subsection J of
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24 this section. Upon such notification, the Secretary shall provide
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 1 notice to the Governor, President Pro Tempore of the Senate and
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2 Speaker of the House of Representatives.
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3 SECTION 2. This act shall become effective July 1, 2023.
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4 SECTION 3. It being immediately necessary for the preservation
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5 of the public peace, health or safety, an emergency is hereby
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6 declared to exist, by reason whereof this act shall take effect and
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7 be in full force from and after its passage and approval.
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9 59-1-259 QD 1/17/2023 7:14:23 PM
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Statutes affected:
Introduced: 68-2357.22
Floor (House): 68-2357.22
Floor (Senate): 68-2357.22
Engrossed: 68-2357.22
Enrolled (final version): 68-2357.22