Vetoed by Governor Michelle Lujan Grisham

Vote Smart's Synopsis:

Vote to pass a bill that establishes an earned income tax credit in New Mexico.

Highlights:

• Establishes the “earned income tax credit” for eligible taxpayers and specifies that the amount of the credit may not exceed (Sec. 1):

• The credit percentage of the earned income amount; over

• The phaseout percentage of as much of the adjusted gross or earned income as exceeds the phaseout amount.

• Specifies the following credit percentages and phaseout percentages for taxpayers depending on their number of qualified children (Sec. 1):

• With one child, the credit percentage is 11.5% and the phaseout percentage is 4.55%;

• With 2 children, the credit percentage is 13.6% and the phaseout percentage is 6.15%;

• With 3 or more children, the credit percentage is 15.3% and the phaseout percentage is 6.15%; and

• With no children, the credit percentage is 2.6% and the phaseout percentage is 2.1%.

• Specifies the following earned income amounts and phaseout amounts for taxpayers depending on their number of qualified children (Sec. 1):

• With one child, the earned income amount is $11,000 and the phaseout amount is $36,000;

• With 2 or more children, the earned income amount is $15,000 and the phaseout amount is $40,000; and

• With no children, the earned income amount is $8,000 and the phaseout amount is $25,000.

• Specifies that for married individuals filing joint returns, the phaseout amount is increased by $5,000 (Sec. 1).

• Specifies that if an individual’s adjusted gross or earned income is less than the earned income amount, then the minimum credit is $100 (Sec. 1).

• Specifies that the earned income amounts, phaseout amounts, and amount of credit detailed in this Section will be adjusted for inflation in each taxable year (Sec. 1).

• Establishes a “foster parent and guardian income tax credit” equalling $250 for each month that a taxpayer is a foster parent or guardian (Sec. 2).

• Specifies that married individuals filing separately may each claim one-half of the tax credit for foster children (Sec. 2).

• Specifies that the foster parent and guardian income tax credit applies to taxable years before 2031 (Sec. 2).

• Authorizes health care practitioners to deduct receipts for commercial contract services or Medicare part C services from their gross receipts (Sec. 3).

• Specifies that the deductions provided in the previous paragraph may only be applied to gross receipts remaining after all other allowable deductions have been taken (Sec. 3).

• Establishes a “liquor excise tax” to be imposed on wholesalers of alcoholic beverages at the following rates (Sec. 4):

• $1.92 per liter on spirituous liquors;

• $0.49 per gallon on beer;

• $0.54 per liter on wine;

• $1.80 per liter on fortified wine; and

• $0.49 per gallon on cider.

• Specifies exceptions and special rates of the liquor excise tax for certified microbrewers, small winegrowers, and craft distillers (Sec. 4).

• Specifies that of the receipts from the liquor excise tax, 39% will go to the local DWI grant fund, 5% will go to the drug court fund, and 12.5% will go to the tribal alcohol harms alleviation fund (Sec. 5).

• Establishes the “tribal alcohol harms alleviation fund” as a nonreverting fund in the state treasury, subject to appropriation by the legislature for alcohol harm prevention, treatment, and recovery services to individuals on designated Native land (Sec. 6).

• Specifies that Section 2 of this Act is repealed on January 1, 2031 (Sec. 7).

• Specifies that Sections 1 and 2 of this Act apply to taxable years starting with 2026 (Sec. 8).

• Specifies that the effective date of Section 3 of this Act is July 1, 2026, and the effective date of Sections 4-6 of this Act is July 1, 2025 (Sec. 9).

Full Bill Text

Vote Smart's Synopsis:

Vote to pass a bill that establishes an earned income tax credit in New Mexico.

Highlights:

• Establishes the “earned income tax credit” for eligible taxpayers and specifies that the amount of the credit may not exceed (Sec. 1):

• The credit percentage of the earned income amount; over

• The phaseout percentage of as much of the adjusted gross or earned income as exceeds the phaseout amount.

• Specifies the following credit percentages and phaseout percentages for taxpayers depending on their number of qualified children (Sec. 1):

• With one child, the credit percentage is 11.5% and the phaseout percentage is 4.55%;

• With 2 children, the credit percentage is 13.6% and the phaseout percentage is 6.15%;

• With 3 or more children, the credit percentage is 15.3% and the phaseout percentage is 6.15%; and

• With no children, the credit percentage is 2.6% and the phaseout percentage is 2.1%.

• Specifies the following earned income amounts and phaseout amounts for taxpayers depending on their number of qualified children (Sec. 1):

• With one child, the earned income amount is $11,000 and the phaseout amount is $36,000;

• With 2 or more children, the earned income amount is $15,000 and the phaseout amount is $40,000; and

• With no children, the earned income amount is $8,000 and the phaseout amount is $25,000.

• Specifies that for married individuals filing joint returns, the phaseout amount is increased by $5,000 (Sec. 1).

• Specifies that if an individual’s adjusted gross or earned income is less than the earned income amount, then the minimum credit is $100 (Sec. 1).

• Specifies that the earned income amounts, phaseout amounts, and amount of credit detailed in this Section will be adjusted for inflation in each taxable year (Sec. 1).

• Establishes a “foster parent and guardian income tax credit” equalling $250 for each month that a taxpayer is a foster parent or guardian (Sec. 2).

• Specifies that married individuals filing separately may each claim one-half of the tax credit for foster children (Sec. 2).

• Specifies that the foster parent and guardian income tax credit applies to taxable years before 2031 (Sec. 2).

• Authorizes health care practitioners to deduct receipts for commercial contract services or Medicare part C services from their gross receipts (Sec. 3).

• Specifies that the deductions provided in the previous paragraph may only be applied to gross receipts remaining after all other allowable deductions have been taken (Sec. 3).

• Establishes a “liquor excise tax” to be imposed on wholesalers of alcoholic beverages at the following rates (Sec. 4):

• $1.92 per liter on spirituous liquors;

• $0.49 per gallon on beer;

• $0.54 per liter on wine;

• $1.80 per liter on fortified wine; and

• $0.49 per gallon on cider.

• Specifies exceptions and special rates of the liquor excise tax for certified microbrewers, small winegrowers, and craft distillers (Sec. 4).

• Specifies that of the receipts from the liquor excise tax, 39% will go to the local DWI grant fund, 5% will go to the drug court fund, and 12.5% will go to the tribal alcohol harms alleviation fund (Sec. 5).

• Establishes the “tribal alcohol harms alleviation fund” as a nonreverting fund in the state treasury, subject to appropriation by the legislature for alcohol harm prevention, treatment, and recovery services to individuals on designated Native land (Sec. 6).

• Specifies that Section 2 of this Act is repealed on January 1, 2031 (Sec. 7).

• Specifies that Sections 1 and 2 of this Act apply to taxable years starting with 2026 (Sec. 8).

• Specifies that the effective date of Section 3 of this Act is July 1, 2026, and the effective date of Sections 4-6 of this Act is July 1, 2025 (Sec. 9).

Full Bill Text