Governor enacts tax cuts for New Mexico seniors, families, and businesses
SANTA FE – Gov. Michelle Lujan Grisham today signed House Bill 163, legislation that includes many of the governor’s priorities intended to keep more money in the pockets of New Mexicans, including exempting social security income from taxation and cutting the state’s gross receipts tax rate for the first time in 40 years.
“New Mexicans, like all Americans, are feeling the pressure of rising costs,” said Gov. Lujan Grisham. “Coupled with the state’s robust current financial situation, there is no reason we shouldn’t be taking every action to cut costs for New Mexican seniors, families and businesses – and today, we are doing just that.”
House Bill 163 is sponsored by Rep. Christine Chandler, Rep. Javier Martínez, Rep. Micaela Lara Cadena, Sen. Peter Wirth, and Sen. Michael Padilla.
The bill eliminates taxation on social security, saving New Mexico seniors over $84 million next year. The bill includes a cap for exemption eligibility of $100,000 for single filers and $150,000 for married couples filing jointly.
In addition, House Bill 163 cuts the state’s gross receipts tax rate by an eighth of a percent starting July 1, 2022, and ramps up to a quarter-percent reduction on July 1, 2023, saving New Mexico businesses and consumers nearly $200 million when fully implemented.
In all, the bill is expected to provide about $400 million of recurring tax relief benefitting all New Mexicans.
House Bill 163 also includes:
- A new refundable child tax credit of up to $175 per child, which will save New Mexico families $74 million annually.
- A one-time, refundable income tax rebate of $500 for married couples filing joint returns with incomes under $150,000, and $250 for single filers with income under $75,000, which will save New Mexicans about $312 million.
- A three-year income tax exemption for armed forces retirees, starting at $10,000 of military retirement income in 2022 and rising to $30,000 of retirement income in tax year 2024.
- A one-time $1,000 refundable income tax credit for tax year 2022 for full-time hospital nurses.
- An extension of the solar market tax credit, worth 10% of the purchase and installation cost of a solar power system.
- An end to the so-called “tampon tax” by creating a gross receipts tax deduction for feminine hygiene products.
- A new gross receipts tax deduction for certain professional services sold to manufacturers, which will help reduce tax “pyramiding” by about $5 million per year and make New Mexico businesses more competitive.
“This tax package is about making a difference for every community in New Mexico,” said Rep. Christine Chandler. “We are putting more money back into the pockets of families with the Child Income Tax Credit, protecting the financial stability of our retired veterans and our low and middle-income senior citizens by cutting or eliminating their state income tax, and boosting our local businesses and attracting investment by cutting the gross receipts tax.”
“New Mexico is leading the way with innovative tax policies that support our working families,” said House Majority Leader Javier Martínez. “Our Child Income Tax Credit will make it easier for struggling families to make ends meet in every community across the state.”
“New Mexico’s Child Income Tax Credit will provide much needed relief to hardworking parents doing their best to raise their children in these trying times,” said Rep. Micaela Lara Cadena.
“This legislation provides much needed tax relief for New Mexico families, seniors, nurses and veterans. It reduces the gross receipts tax for the first time in forty years, a critical first step towards the comprehensive tax reform New Mexico needs,” said Senate Majority Leader Peter Wirth. “I appreciate the bipartisan work on this tax package and thank Governor Lujan Grisham for signing it into law today.”
“The elimination of income tax on Social Security in New Mexico is going to benefit retirees, the many children being fostered by their grandparents, and New Mexico’s middle class,” said Sen. Michael Padilla. “This effort has been a long time coming and I would like to recognize Governor Lujan Grisham for making it a priority for the session and signing it into law today.”
“Social Security tax relief is a matter of fairness for middle-income retirees and it is an investment in the financial security of New Mexicans for years to come,” said Joseph P. Sánchez, AARP New Mexico State Director. “AARP has long fought to lessen the burden of state tax on Social Security beneficiaries, and this bill is a giant step forward. AARP commends Gov. Michelle Lujan Grisham and our elected officials for taking advantage of this historic opportunity and providing New Mexico’s retirees with some much-needed financial relief.”
On Wednesday the governor also signed into law:
- House Bill 39 – GRT Deduction for Nonathletic Special Events
- House Bill 67 – Tech Readiness Gross Receipts Tax Credit
- House Bill 82 – Dialysis Facility Gross Receipts
- House Bill 102 – Entity Level Tax Income and Payment
- House Bill 167 – Tribe & Pueblo Car Excise Tax Credit
- Senate Bill 138 – Medical & Health Care Gross Receipts