Robust Tax Package Headed to Governor’s Desk
The House concurred with Senate amendments, including new and expanded credits for clean energy, teachers, veterans, and families
Santa Fe, N.M. - Today, the House of Representatives approved amendments made by the Senate to House Bill 252, the omnibus tax package, with a bipartisan vote of 39-27. House Bill 252 would make New Mexico’s tax code more equitable, expand incentives for rural healthcare providers, support local businesses and childcare providers, advance the state’s climate goals, and provide relief to families impacted by wildfires.
Senate amendments added tax credits for clean energy, energy storage systems, and electric vehicles. They also increased the Special Needs Adopted Child Tax Credit and created a new tax deduction for public school teachers buying supplies.
“The House put together a tax package that enables working New Mexicans to hold on to more of what they earn, expands clean energy incentives, and improves access to healthcare and childcare,” said bill sponsor House Taxation and Revenue Committee Chair Derrick Lente (D-Sandia Pueblo). “The measures in this package, including the amendments from our Senate colleagues, will modernize our tax code and have positive impacts for generations to come.”
The measures in the final version of House Bill 252 include:
Tax Equity
Brings needed reform to New Mexico’s personal income tax system, decreasing income taxes for all taxpayers, with the greatest rate cuts for the lowest earners.
Reduces the Capital Gains Tax break that overwhelmingly benefits the state’s highest earners, capping the deduction at $2,500, and brings our system in line with other states.
Healthcare
Expands the Rural Healthcare Practitioner Tax Credit to additional health professionals, including those working in underserved rural areas - which would more than double the number of qualifying providers and help recruit practitioners to in-need communities.
Provides a GRT deduction to healthcare providers who facilitate necessary home renovations for those on Medicaid, such as wheelchair ramps and shower bars.
Education & Child Wellbeing
Creates a GRT deduction for licensed childcare and pre-K providers, who currently operate at a deficit, due to the 8-9% GRT charged to them for children receiving state assistance and ensures the tax is not passed on to New Mexican families.
Increases the Special Needs Adopted Child Tax Credit by $500.
Allows public school teachers to deduct up to $1000 per year on their personal income taxes for the cost of school supplies.
Business & Economic Development
Flattens New Mexico’s corporate income tax rate at 5.9%. For businesses with incomes less than $500,000, this would amount to only an estimated $500 more per year.
Extends the qualification deadline for Angel Investment Tax Credits from 2025 to 2030, to encourage investment in New Mexico businesses and provide local businesses with needed startup capital.
Exempts the sale of New Mexico businesses from the proposed capital gains cap to protect those who invest in local business.
Permits certain electrical energy generators to continue using a single-sales factor in calculating corporate income tax.
Environment
Creates refundable income tax credits for the purchase of electric vehicles (EVs) and corresponding charging units. Credits apply at different amounts to new or pre-owned EVs, hybrid EVs, and fuel cell vehicles.
Gives municipalities and counties authority to negotiate Industrial Revenue Bonds (IRB) for energy storage facilities, as they can for solar and wind production projects and renewable energy transmission facilities.
Creates a Geothermal Electricity Tax Credit for personal and corporate income taxes, creates GRT and compensation tax deductions for geothermal electricity generation facility costs, and expands tax credits for geothermal ground-coupled heat pumps.
Creates an income tax credit for qualified manufacturing facilities in New Mexico that create advanced energy products, such as solar and wind energy components.
Increases the aggregate cap on tax credits for the purchase and installation of a solar electricity system to $30 million, up from $12 million.
Provides a GRT deduction for sales of energy storage equipment to local governments.
Wildfire Victims
Establishes a Fire Recovery Income Tax Credit of up to $50,000, for New Mexicans rebuilding homes destroyed in recent wildfires.
Provides a GRT deduction of up to $5 million annually for legal services provided to help victims of the Hermit’s Peak/Calf Canyon Fire receive federal compensation.
Veterans
Continues the income tax exemption for up to $30,000 in armed forces retirement pay, and adds surviving spouses to the exemption.
The Roundhouse is open to the public for the 2024 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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