House Taxation and Revenue Committee Approves Tax Reform Package
Bill would make tax policy more equitable, provide relief for working families, ease tax burdens for small businesses & seniors, and support climate goals
Santa Fe, NM- Today, the House Taxation and Revenue Committee passed House Bill 547, an omnibus tax reform package, with a vote of 9-5. The tax package would make New Mexico’s tax code more equitable, provide relief for working families, ease the tax burden on small businesses, veterans, and seniors, and support climate goals.
“This tax package is a responsible way we can use our capacity now to effect generational change,” said Rep. Derrick Lente (D-Sandia Pueblo) who chairs the House Taxation and Revenue Committee and is the lead sponsor of the bill. “Like our state budget, our tax policy should reflect our New Mexican values. HB 547 puts money into the pockets of working parents, retirees, and veterans, while bolstering small businesses and supporting climate goals. ”
The tax package increases the Child Income Tax Credit, an income-based state tax credit for families with children, providing more relief to working families across the state. This refundable tax credit benefits every child in New Mexico, with more money going to families with lower incomes.
“Increasing the Child Income Tax Credit is one step we can take right now to meaningful relief to working families,” said Rep. Micaela Lara Cadena (D-Mesilla). “We know that making these kinds of investments now will pay dividends down the road, helping New Mexico families make ends meet and kids thrive.”
The bill also restructures Personal Income Tax rates, which would stabilize revenue streams and make New Mexico’s tax system more equitable by cutting tax breaks for the highest earners and investing in vital programs and services that benefit communities across the state.
It would reduce the Capital Gains Tax break that overwhelmingly benefits the state’s highest earners, capping out this 40% deduction on unearned income at $2500, bringing our system in-line with 41 other states.
Additionally, HB 547 would flatten the Corporate Income Tax to 5.9%, making profitable companies contribute their fair share toward public services. It also reduces New Mexico’s overall Gross Receipts Tax rate from 5% to 4.5% until July 2024 and to 4.375% after, benefiting families and local businesses.
“Over the last several years, we have worked hard to reduce the tax burden on everyday New Mexicans,” said Rep. Christine Chandler (D-Los Alamos). “Now that most New Mexicans are paying lower taxes, adding progressivity to the tax code is a critical next step to tax reform. We can continue our work to level the playing field by making sure the wealthiest individuals and most profitable companies are paying their fair share.”
The tax reform bill also has measures to help New Mexico meet its ambitious climate goals and support efforts to bring all New Mexicans along in the transition to clean energy. These measures include refundable tax credits for New Mexicans who purchase electric vehicles, with larger credits for families with lower incomes, and tax credits for energy storage systems.
“It’s critical that we include policies in our tax package that will help us move toward our clean energy future,” said Rep. Kristina Ortez (D-Taos).“The environmental tax credits in this tax reform package will help make clean energy more affordable for working New Mexicans, while enabling us to cut back on our carbon footprint.”
The bill now heads to the House Floor.
The Roundhouse is open to the public for the 2023 session. Members of the public can also view floor sessions and committee meetings on the New Mexico Legislature’s Webcasts tab, and provide comment via phone or Zoom as directed on the daily schedule.
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