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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
HOUSE BILL 2542 By: O'Donnell and McBride
AS INTRODUCED
An Act relating to revenue and taxation; a mending 68
O.S. 2021, Section 2357.22, as amended by Section 1,
Chapter 404, O.S.L. 2022 (68 O.S. Supp. 2022, Section
2357.22) which relates to income tax credits for
certain qualified fuel burning properties; modifying
definitions; modifying eligible vehicle types for
purposes of tax credit; deleting reference to certain
tax year; providing an effective date ; and declaring
an emergency.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 68 O.S. 2021, Section 2357.22, as
amended by Section 1, Chapter 404, O.S.L. 2022 (6 8 O.S. Supp. 2022,
Section 2357.22), is amended to read as f ollows:
Section 2357.22 A. For tax years 2028 and before, there shall
be allowed a one-time credit against the income tax imposed by
Section 2355 of this title for investments in qualified clean -
burning motor vehicle fuel property placed in service on or after
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January 1, 1991, or with respect to a hydrogen fuel cell, on or
after the effective date of this act .
B. As used in this section, "qualified clean -burning motor
vehicle fuel property" mean s:
1. Equipment installed to modify a motor vehicle which i s
propelled by gasoline or diese l fuel so that the vehicle may be
propelled by compressed natural gas, a hydrogen fuel cell, liquefied
natural gas, or liquefied petroleum gas. The equipment cover ed by
this paragraph must:
a. be new, not previously used to modify or retrofit any
vehicle propelled by gasoline or diesel fuel and be
installed by an alternative fuels equipment technician
who is certified in accordance with the Alternative
Fuels Technician Certification Act,
b. meet all Federal Motor Vehicle Saf ety Standards set
forth in 49 CFR 571, or
c. for any commercial motor vehicle (CMV), follow the
Federal Motor Carrier Safety Regulations or Oklahoma
Intrastate Motor Carrier Regulations;
2. A motor vehicle originally equipped so that the vehicle may
be propelled by compressed natural gas, a hydrogen fuel cell, or
liquefied natural gas or liquefied petroleum gas but only to the
extent of the portion of the basis of such motor vehicle which is
attributable to the storage of such fuel, the delivery to the eng ine
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of such motor vehicle of such fuel, and the exhaust of gases from
combustion of such fuel;
3. Property, not including a building and its structural
components, which is:
a. directly related to the delivery of compressed na tural
gas, liquefied natural gas or liquefied petroleum gas,
or hydrogen for commercial purposes or for a fee or
charge, into the fuel tank of a motor vehicle
propelled by such fuel including compression equipment
and storage tanks for such fuel at the poi nt where
such fuel is so deli vered but only if such property is
not used to deliver such fuel into any other type of
storage tank or receptacle and such fuel is not used
for any purpose other than to propel a motor vehicle,
or
b. a metered-for-fee, public access recharging system for
motor vehicles propelled in whole or in part by
electricity. The property covered by this paragraph
must be new, and must not have been previously
installed or used to refuel vehicles powered by
compressed natural gas, liquefi ed natural gas or
liquefied petroleum gas, hydrogen, or electricity.
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Any property covered by this paragraph which is related to the
delivery of hydrogen into the fuel tank of a motor vehicle shall
only be eligible for tax yea rs 2010 and 2023 through 2028 ;
4. Property which is directl y related to the compression and
delivery of natural gas from a private home or residence, for
noncommercial purposes, into the fuel tank of a motor vehicle
propelled by compressed natural gas. T he property covered by this
paragraph must be new and must n ot have been previously installed or
used to refuel vehicles powered by natural gas; or
5. For tax years 2010 and 2023 through 2028, a motor vehicle
originally equipped so that the vehicle may be propelled by a
hydrogen fuel cell electric fueling system.
C. As used in this section, "motor vehicle" means a motor
vehicle originally designed by the manufacturer to operate lawfully
and principally on streets and highways.
D. The credit provided for in subsection A of this section
shall be as follows:
1. For the qualified clean-burning motor vehicle fuel property
defined in paragraphs 1, 2, or 5 of subsection B of this section,
the amount of the credit shall be as follows based upon gross
vehicle weight of the qualified vehicle:
a. for vehicles up to or below six thousand (6,000)
pounds, the credit shall be a maximum of Five Thousand
Five Hundred Dollars ($5,500.00),
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b. for vehicles between six thousand one (6,001) pounds
to ten thousand (10,000) poun ds, the credit shall be a
maximum amount of Nine Thousand Do llars ($9,000.00),
c. for vehicles of ten thousand one (10,001) pounds, but
not in excess of twenty -six thousand five hundred
(26,500) pounds, the credit shall be a maximum amount
of Twenty-six Thousand Dollars ($26,000.00), an d
d. for vehicles in excess o f twenty-six thousand five
hundred one (26,501) pounds, the credit shall be a
maximum amount of One Hundred Thousand Dollars
($100,000.00);
2. For qualified clean -burning motor vehicle fuel prope rty
defined in paragraph 3 of s ubsection B of this section, a per-
location credit of forty -five percent (45%) of the cost of the
qualified clean-burning motor vehicle fuel property; and
3. For qualified clean -burning motor vehicle fuel property
defined in paragraph 4 of subsection B of this section, a per-
location credit of the lesser of fifty percent (50%) of the cost of
the qualified clean-burning motor vehicle fuel property or Two
Thousand Five Hundred Dollars ($2,500.00).
E. In cases where no credit h as been claimed pursuant to
paragraph 1 of subsection D of t his section by any prior owner and
in which a motor vehicle is purchased by a taxpayer with qualified
clean-burning motor vehicle fuel property installed by the
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manufacturer of such motor vehicle and the taxpayer is unable or
elects not to determine the ex act basis which is attributable to
such property, the taxpayer may claim a credit in an amount not
exceeding the lesser of ten percent (10%) of the cost of the motor
vehicle or One Thousand Five H undred Dollars ($1,500.00).
F. If the tax credit allowed pu rsuant to subsection A of this
section exceeds the amount of income taxes due or if there are no
state income taxes due on the income of the taxpayer, the amount of
the credit not used as an offse t against the income taxes of a
taxable year may be carried forward, in order, as a credit against
subsequent income tax liability for a period not to exceed five (5)
years. The tax credit authorized pursuant to the provisions of this
section shall not be used to reduce the tax liabili ty of the
taxpayer to less than zero (0).
G. A husband and wife who file separate returns for a taxable
year in which they could have filed a joint return may each claim
only one-half (1/2) of the tax credit that would have been allowed
for a joint return.
H. The Oklahoma Tax Commis sion is herein empowered to
promulgate rules by which the purpose of this section shall be
administered including the power to establish and enforce penalties
for violations thereof.
I. Notwithstanding the provisions of Sectio n 2352 of this
title, for the fiscal year beginning on July 1, 2014, and each
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fiscal year thereafter, the Tax Commission shall calculate an amount
that equals five percent (5%) of the cost of qualified clean -burning
motor vehicle fuel property as provided for in paragraph 1 of
subsection D of this section for tax year 2012. For each subsequent
fiscal year thereafter, the Tax Commission shall perform the same
computation with respect to the second tax year preceding the
beginning of each subsequent fiscal y ear. The Tax Commission shal l
then transfer an amount equal to the amount calculated in this
subsection from the revenue derived pursuant to the provisions of
subsections A, B and E of Section 2355 of this title to the
Compressed Natural Gas Conversion Sa fety and Regulation Fund crea ted
in Section 130.25 of Title 74 of the Oklahoma Statutes.
J. For the tax years 2020 through 2022, the total amount of
credits authorized by this section used to offset tax shall be
adjusted annually to limit the annual amoun t of credits to Twenty
Million Dollars ($20,000,000.00). The Tax Commission shall annually
calculate and publish by the first day of the affected taxable year
a percentage by which the credits authorized by this section shal l
be reduced so the total amoun t of credits used to offset t ax does
not exceed Twenty Million Dollars ($20,000,000.00) per year. The
formula to be used for the percentage adjustment shall be Twenty
Million Dollars ($20,000,000.00) divided by the credits c laimed in
the second preceding year, with respect to any cha nges to the future
of the credit.
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K. Pursuant to subsection J of this section, in the event the
total tax credits authorized by this section exceed Twenty Million
Dollars ($20,000,000.00) in any calendar year, the Tax Commission
shall permit any excess ov er Twenty Million Dollars ($20,000,000.00)
but shall factor such excess into the percentage adjustment form ula
for subsequent years with respect to any changes to the future of
the credit.
L. For the tax years 2023 through 2028, the total amount of
credits authorized by this section used to offset tax shall be
adjusted annually to limit the annual amount of cr edits to:
1. Ten Million Dollars ($10,000,000.00) for qualified clean
burning fuel property propelled by compressed natural gas, liquefied
natural gas, or liquefied petroleum gas, property related to the
delivery of compressed natural gas, liquefied natur al gas or
liquefied petroleum gas, and property directly related to the
compression and delivery of natural gas;
2. Ten Million Dollars ($10,000,000 .00) for property originally
equipped so that the vehicle may be propelled by a hydrogen fuel
cell electric fueling system and property directly related to the
delivery of hydrogen; and
3. Ten Million Dollars ($10,000,000.00) for property which is a
metered-for-fee, public access recharging system for motor vehicles
propelled in whole or in part by electricity .
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The Tax Commission shall annually calculate and publish by the
first day of the affecte d taxable year a percentage by which the
credits authorized by this section shall be reduced so the total
amount of credits used to offset tax does not exceed each of the
limits provided in paragraphs 1 through 3 of this subsection. The
formula to be used for the percentage adjustment shall be Ten
Million Dollars ($10,000,000.00) divided by the credits claimed in
the second preceding year, with respect to any changes t o the future
of the credit.
M. Pursuant to subsection L of this section, in the event th e
tax credits authorized by this section exceed any of the l imits
provided in paragraphs 1 through 3 of subsection L of this section
in any year, the Tax Commission sh all permit any excess over Ten
Million Dollars ($10,000,000.00) but shall factor such exc ess into
the percentage adjustment formula for subsequent ye ars with respect
to any changes to the future of the credit.
N. The Tax Commission shall notify the Office of the State
Secretary of Energy and Environment at any time when the amount of
claims for credits allowed pursuant to this section reaches eighty
percent (80%) of the total annual limit provided in subsection J of
this section. Upon such notification, t he Secretary shall provide
notice to the Governor, President Pro Tempore of the Senate an d
Speaker of the House of Representatives.
SECTION 2. This act shall become effective July 1, 2023.
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SECTION 3. It being immediately neces sary for the preservation
of the public peace, health or safety, an emergency is here by
declared to exist, by reason whereof thi s act shall take effect and
be in full force from and after its passage and approval.
59-1-6643 MAH 01/12/23