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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
SENATE BILL 605 By: Rader
AS INTRODUCED
An Act relating to income tax credit; amending 68
O.S. 2021, Section 2357.22, as amende d by Section 1,
Chapter 404, O.S.L. 2022 (68 O.S. S upp. 2022, Section
2357.22), which relates to one-time credit for
investments in qualified clean -burning motor vehicle
fuel property; modifying certain required calculation
by the Oklahoma Tax Commission for certain fiscal
years; 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, Cha pter 404, O.S.L. 2022 (68 O.S. Supp. 2022,
Section 2357.22), is amended to read as follows:
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 inves tments in qualified clean-
burning motor vehicle fuel property placed in service on or after
January 1, 1991.
B. As used in this section, “qualified clean-burning motor
vehicle fuel property ” means:
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1. Equipment installed to modify a motor vehicle which i s
propelled by gasoline or diesel fuel so that the vehicle may be
propelled by compressed natural gas, liquefied n atural gas, or
liquefied petroleum gas. The equip ment covered by this paragraph
must:
a. be new, not previously used to modify or retrofit an y
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 Safety Standards set
forth in 49 CFR 571, or
c. for any commercial moto r vehicle (CMV), follow the
Federal Motor Carrier Safety Regulations or Oklahoma
Intrastate Motor Carrier Regulations;
2. A motor vehicle originally equippe d so that the vehicle may
be propelled by compressed natural gas, 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 t he storage of
such fuel, the delivery to the e ngine of such motor vehicle of such
fuel, and the exhaust of gases from combustion of such f uel;
3. Property, not including a building and its structural
components, which is:
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a. directly related to the delive ry of compressed natural
gas, liquefied natura l 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 inclu ding compression equipment
and storage tanks for s uch fuel at the point where
such fuel is so delivered 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, liquefied natural gas or
liquefied petroleum gas, hydrogen, or electricity.
Any property covered by this paragraph which is re lated to the
delivery of hydrogen into the fuel tank of a motor vehi cle shall
only be eligible for tax years 2010 and 2023 through 2028;
4. Property which is directly 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
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propelled by compressed natural ga s. The property covered by this
paragraph must be new and must not have been previously installed or
used to refuel vehicles powered by natural gas; or
5. For tax years 2010 and 2023 through 202 8, 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 th is 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 vehic le:
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),
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 Dollars ($9,000.00),
c. for vehicles of ten thousand one (10,001) pounds, but
not in excess of twenty-six thousand five hundred
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(26,500) pounds, the credit shall be a maximum amount
of Twenty-six Thousand Dollars ($26,000.00 ), and
d. for vehicles in excess of 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 cl ean-burning motor vehicle fuel property
defined in paragraph 3 of subsection 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 has been cl aimed pursuant to
paragraph 1 of subsection D of this 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
manufacturer of such motor vehicle and the ta xpayer is unable or
elects not to determine the exact 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 Hundred Dol lars ($1,500.00).
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F. If the tax credit allowed pursuant 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 amoun t of
the credit not used as an offset 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 pro visions of this
section shall not be used to r educe the tax liability 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 allow ed
for a joint return.
H. The Oklahoma Tax Commission 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 th e provisions of Section 2352 of this
title, for the fiscal year beginning on July 1, 2014, and each
fiscal year thereafter through fiscal year 202 3, 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 subsequen t fiscal year thereafter, the Tax
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Commission shall perform the same computation with respect to the
second tax year preceding the beginning of ea ch subsequent fiscal
year. For fiscal year 2024, the Tax Commission s hall calculate an
amount that equals twelve percent (12%) of the credit for qualified
clean-burning motor vehicle fuel property as provided in paragraph 1
of subsection D of this section for tax year 2021. For each
subsequent fiscal year, the Tax Commission shall perform the same
calculation for credits c laimed in the second preceding tax year.
The Tax Commission shall then transfe r 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 Safety and Regulation
Fund created 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 t ax shall be
adjusted annually to limit the annual amount of credits to Twenty
Million Dollars ($20 ,000,000.00). The Tax Commission shall annual ly
calculate and publish by the first day of the affected taxable y ear
a percentage by which the credits authori zed by this section shall
be reduced so the total amount of credits used to offset tax does
not exceed Twenty Million Dollars ($20,000,000.00) per year. The
formula to be used for the percentage adjustment shal l be Twenty
Million Dollars ($20,000,000.00) divided by the credits claimed in
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the second preceding year, with respect to a ny changes to the fu ture
of the credit.
K. Pursuant to subsection J of this section, in th e event the
total tax credits authorized b y this section exceed Twenty Million
Dollars ($20,000,000.00) in any calendar year, the Tax Commission
shall permit any excess over Twenty Million Dollars ($20,000,000.00)
but shall factor such excess into the perc entage adjustment formula
for subsequent years with respect to any changes to the fut ure of
the credit.
L. For the tax years 2023 through 2028, the total amount of
credits authorized b y this section used to offset tax shall be
adjusted annually to limit the annual amount of credits to:
1. Ten Million Dollars ($10,000,000.00) for qualified clean
burning fuel property propelled by compressed natural gas, liquefied
natural gas, or liquefi ed petroleum gas, property related to the
delivery of compressed natu ral gas, liquefied na tural 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 ma y be propelled by a hy drogen fuel
cell electric fueling system and property directly related to the
delivery of hydrogen; and
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3. Ten Million Dollars ($10,000,000.00) for property which is a
metered-for-fee, public access recharging system for motor vehicl es
propelled in whole or in part by electric ity.
The Tax Commission shal l annually calculate and publish by the
first day of the affected taxable year a percentage by which the
credits authorized by this sectio n shall be reduced so the total
amount of credits used to offset t ax 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, wi th respect to any change s to the future
of the credit.
M. Pursuant to subsection L of this section, in the event the
tax credits authorized by this section exceed any of the limits
provided in paragraphs 1 through 3 of subsection L of this section
in any year, the Tax Commission shall permit any excess ove r Ten
Million Dollars ($10,000,000.00) but shall factor such excess into
the percentage adjustment formula for subsequent years with respe ct
to any changes to the future of the credit.
N. The Tax Commission shall notify the Off ice 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 , the Secretary shall provi de
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notice to the Governor, President Pro Tempore of the Senate and
Speaker of the House of Representatives.
SECTION 2. This act shall become effective July 1, 2023.
SECTION 3. It being immediatel y necessary for the preservation
of the public peace, health or safety, an emergency is hereby
declared to exist, by reason whereof thi s act shall take effect and
be in full force from and after its passage and approval.
59-1-259 QD 1/17/2023 7:14:23 PM