SB 239

1STATE OF OKLAHOMA
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21st Session of the 60th Legislature (2025)
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3 SENATE BILL 239  By: Wingard
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6AS INTRODUCED
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7An Act relating to income tax; amending 68 O.S. 2021,
7Section 2357.32A, which relates to credit on the sale
8of electricity generated by zero-emission facilities;
8limiting credit to certain tax years; limiting carry
9forward provisions; updating statutory language; and
9providing an effective date.
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12 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
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13     SECTION 1.      AMENDATORY       68 O.S. 2021, Section 2357.32A, is
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14 amended to read as follows:
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15     Section 2357.32A.   A.   Except as otherwise provided in
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16 subsection H of this section, for tax years beginning on or after
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17 January 1, 2003 2003 through 2025, but with respect to tax credits
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18 for eligible renewable resources described by subparagraphs b, c and
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19 d of paragraph 2 of this subsection, for tax years ending not later
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20 than December 31, 2021, there shall be allowed a credit against the
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21 tax imposed by Section 2355 of this title to a taxpayer for the
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22 taxpayer’s production and sale to an unrelated person of electricity
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23 generated by zero-emission facilities located in this state.     As
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24 used in this section:
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1     1.   “Electricity generated by zero-emission facilities” means
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2 electricity that is exclusively produced by any facility located in
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3 this state with a rated production capacity of one megawatt (1 mw)
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4 or greater, constructed for the generation of electricity and placed
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5 in operation after June 4, 2001, and with respect to electricity
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6 generated by wind for any facility placed in operation not later
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7 than July 1, 2017, which utilizes eligible renewable resources as
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8 its fuel source.   The construction and operation of such facilities
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9 shall result in no pollution or emissions that are or may be harmful
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10 to the environment, pursuant to a determination by the Department of
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11 Environmental Quality; and
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12     2.   “Eligible renewable resources” means resources derived from:
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13a.    wind,
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14b.    moving water,
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15c.    sun, or
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16d.    geothermal energy.
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17     B.   For facilities placed in operation on or after January 1,
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18 2003, and before January 1, 2007, the amount of the credit for the
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19 electricity generated on or after January 1, 2003, but prior to
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20 January 1, 2004, shall be seventy-five one-hundredths of one cent
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21 ($0.0075) for each kilowatt-hour of electricity generated by zero-
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22 emission facilities.     For electricity generated on or after January
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23 1, 2004, but prior to January 1, 2007, the amount of the credit
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24 shall be fifty one-hundredths of one cent ($0.0050) per kilowatt-
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1 hour for electricity generated by zero-emission facilities.    For
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2 electricity generated on or after January 1, 2007, but prior to
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3 January 1, 2012, the amount of the credit shall be twenty-five one-
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4 hundredths of one cent ($0.0025) per kilowatt-hour of electricity
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5 generated by zero-emission facilities.   For facilities placed in
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6 operation on or after January 1, 2007, and before January 1, 2021,
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7 or with respect to electricity generated by wind for any facility
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8 placed in operation not later than July 1, 2017, the amount of the
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9 credit for the electricity generated on or after January 1, 2007,
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10 shall be fifty one-hundredths of one cent ($0.0050) for each
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11 kilowatt-hour of electricity generated by zero-emission facilities.
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12    C.   Credits may be claimed with respect to electricity generated
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13 on or after January 1, 2003, during a ten-year period following the
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14 date that the facility is placed in operation on or after June 4,
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15 2001, or through tax year 2025, whichever occurs earlier.
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16    D.   1.   For credits generated prior to January 1, 2014, if the
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17 credit allowed pursuant to this section exceeds the amount of income
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18 taxes due or if there are no state income taxes due on the income of
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19 the taxpayer, the amount of the credit allowed but not used in any
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20 tax year may be carried forward as a credit against subsequent
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21 income tax liability for a period not exceeding ten (10) years.
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22    2.   Except as provided by paragraph 3 of this subsection, for
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23 credits generated, but not used, on or after January 1, 2014, the
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24 Oklahoma Tax Commission shall refund, at the taxpayer’s election,
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1 directly to the taxpayer eighty-five percent (85%) of the face
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2 amount of such credits.   The direct refund of the credits pursuant
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3 to this paragraph shall be available to all taxpayers, including,
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4 without limitation, pass-through entities and taxpayers subject to
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5 Section 2355 of this title, but shall not be available to any
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6 entities falling within the provisions of subsection E of this
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7 section.   The amount of any direct refund of credits actually
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8 received at the eighty-five percent (85%) level by the taxpayer
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9 pursuant to this paragraph shall not be subject to the tax imposed
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10 by Section 2355 of this title.   If the pass-through entity does not
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11 file a claim for a direct refund, the pass-through entity shall
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12 allocate the credit to one or more of the shareholders, partners or
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13 members of the pass-through entity; provided, the total of all
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14 credits refunded or allocated shall not exceed the amount of the
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15 credit or refund to which the pass-through entity is entitled.     For
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16 the purposes of this paragraph, “pass-through entity” means a
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17 corporation that for the applicable tax year is treated as an S
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18 corporation under the Internal Revenue Code of 1986, as amended,
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19 general partnership, limited partnership, limited liability
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20 partnership, trust or limited liability company that for the
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21 applicable tax year is not taxed as a corporation for federal income
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22 tax purposes.
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23    3.   With respect to credits claimed for the first time on or
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24 after July 1, 2019, or the effective date of this act, whichever
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1 date last occurs, a taxpayer may irrevocably elect to not receive a
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2 direct refund for a given tax year.   Any credits not directly
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3 refunded may be carried forward as a credit against subsequent
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4 income tax liability for a period not exceeding ten (10) years, but
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5 in no event shall credit be carried forward to tax year 2026 or
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6 subsequent tax years.   If a taxpayer makes the irrevocable election
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7 to carry over credits for a given tax year pursuant to this
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8 paragraph, any credits remaining in the tenth year of carry forward
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9 or tax year 2025, whichever occurs first, shall be refunded at
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10 eighty-five percent (85%).
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11     E.   Any nontaxable entities, including agencies of the State of
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12 Oklahoma or political subdivisions thereof, shall be eligible to
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13 establish a transferable tax credit in the amount provided in
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14 subsection B of this section.   Such tax credit shall be a property
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15 right available to a state agency or political subdivision of this
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16 state to transfer or sell to a taxable entity, whether individual or
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17 corporate, who shall have an actual or anticipated income tax
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18 liability under Section 2355 of this title.   These tax credit
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19 provisions are authorized as an incentive to the State of Oklahoma,
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20 its agencies and political subdivisions to encourage the expenditure
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21 of funds in the development, construction and utilization of
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22 electricity from zero-emission facilities as defined in subsection A
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23 of this section.
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1     F.    For credits generated prior to January 1, 2014, the amount
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2 of the credit allowed, but not used, shall be freely transferable at
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3 any time during the ten (10) years following the year of
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4 qualification.     Any person to whom or to which a tax credit is
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5 transferred shall have only such rights to claim and use the credit
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6 under the terms that would have applied to the entity by whom or by
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7 which the tax credit was transferred.    The provisions of this
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8 subsection shall not limit the ability of a tax credit transferee to
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9 reduce the tax liability of the transferee, regardless of the actual
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10 tax liability of the tax credit transferor, for the relevant taxable
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11 period.    The transferor initially allowed the credit and any
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12 subsequent transferees shall jointly file a copy of any written
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13 transfer agreement with the Oklahoma Tax Commission within thirty
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14 (30) days of the transfer.    The written agreement shall contain the
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15 name, address and taxpayer identification number or Social Security
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16 number of the parties to the transfer, the amount of the credit
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17 being transferred, the year the credit was originally allowed to the
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18 transferor, and the tax year or years for which the credit may be
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19 claimed.    The Tax Commission may promulgate rules to permit
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20 verification of the validity and timeliness of the tax credit
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21 claimed upon a tax return pursuant to this subsection but shall not
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22 promulgate any rules that unduly restrict or hinder the transfers of
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23 such tax credit.    The tax credit allowed by this section, upon the
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24 election of the taxpayer, may be claimed as a payment of tax, a
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1 prepayment of tax or a payment of estimated tax for purposes of
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2 Section 1803 or Section 2355 of this title.
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3     G.   For electricity generation produced and sold in a calendar
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4 year, the tax credit allowed by the provisions of this section, upon
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5 election of the taxpayer, shall be treated and may be claimed as a
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6 payment of tax, a prepayment of tax or a payment of estimated tax
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7 for purposes of Section 2355 of this title on or after July 1 of the
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8 following calendar year.
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9     H.   No credit otherwise authorized by the provisions of this
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10 section may be claimed for any event, transaction, investment,
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11 expenditure or other act occurring on or after July 1, 2010, for
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12 which the credit would otherwise be allowable until the provisions
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13 of this subsection shall cease to be operative on July 1, 2011.
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14 Beginning July 1, 2011, the credit authorized by this section may be
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15 claimed for any event, transaction, investment, expenditure or other
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16 act occurring on or after July 1, 2010, according to the provisions
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17 of this section.   Any tax credits which accrue during the period of
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18 July 1, 2010, through June 30, 2011, may not be claimed for any
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19 period prior to the taxable year beginning January 1, 2012.    No
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20 credits which accrue during the period of July 1, 2010, through June
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21 30, 2011, may be used to file an amended tax return for any taxable
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22 year prior to the taxable year beginning January 1, 2012.
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23     I.   For tax years beginning on or after January 1, 2019, the
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24 total amount of credits authorized by this section with respect to
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1 eligible renewable resources described by subparagraphs b, c and d
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2 of paragraph 2 of subsection A of this section used to offset tax or
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3 paid as a refund shall be adjusted annually to limit the annual
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4 amount of credits to Five Hundred Thousand Dollars ($500,000.00).
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5 The Tax Commission shall annually calculate and publish a percentage
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6 by which the credits authorized by subparagraphs b, c and d of
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7 paragraph 2 of subsection A of this section shall be reduced so the
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8 total amount of credits used to offset tax or paid as a refund does
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9 not exceed Five Hundred Thousand Dollars ($500,000.00) per year.
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10 The formula to be used for the percentage adjustment shall be Five
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11 Hundred Thousand Dollars ($500,000.00) divided by the credits
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12 claimed in the second preceding year.
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13    J.   Pursuant to subsection I of this section, in the event the
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14 total tax credits authorized by this section with respect to
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15 eligible renewable resources described by subparagraphs b, c and d
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16 of paragraph 2 of subsection A of this section exceed Five Hundred
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17 Thousand Dollars ($500,000.00) in any calendar year, the Tax
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18 Commission shall permit any excess over Five Hundred Thousand
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19 Dollars ($500,000.00) but shall factor such excess into the
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20 percentage adjustment formula for subsequent years.
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21    K.   Any credits authorized by this section with respect to
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22 eligible renewable resources described by subparagraphs b, c and d
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23 of paragraph 2 of subsection A of this section not used or unable to
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1 be used because of the provisions of subsection I or J of this
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2 section may be carried over until such credits are fully used.
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3     L.   The Tax Commission shall prepare an annual report and submit
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4 it to the Office of the State Secretary of Energy and Environment,
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5 the Governor, the Speaker of the Oklahoma House of Representatives
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6 and the President Pro Tempore of the Oklahoma State Senate
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7 summarizing the amount of credits allowed pursuant to subparagraphs
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8 b, c and d of paragraph 2 of subsection A of this section.   The
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9 Secretary of Energy and Environment shall submit recommendations for
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10 changes to the tax credit to the Governor, the Speaker of the
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11 Oklahoma House of Representatives and the President Pro Tempore of
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12 the Oklahoma State Senate within sixty (60) days after receipt of
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13 the report from the Oklahoma Tax Commission.
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14     SECTION 2.   This act shall become effective November 1, 2025.
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16     60-1-796       QD        12/30/2024 5:20:05 PM
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