A bill that would make major changes to New Mexico’s tax code is on its way to the House Floor.
House Bill 547 passed the Tax and Revenue Committee Monday morning on a party line 9-5 vote.
Supporters say the bill will make New Mexico’s tax code more equitable and bring relief to working families.
It increases the Child Income Tax Credit providing up to $600 more per family.
It lowers the Gross Receipts Tax from five-percent to four-percent until July of 2024 and then down to 4.375% after that.
After the vote bill sponsor and Tax Committee Chair Derrick Lente said it was a long and hard process with the whole committee working together to get it accomplished.
“Like our state budget, our tax package reflects New Mexican values. This bill will make New Mexico’s tax code more equitable, provide relief for working families, ease the tax burdens on small businesses, vets and seniors and support our efforts to combat climate change and transition to a clean energy future,” he said. “It brings greater equity to our tax system with increases to the Child Income Tax Credit to help families get ahead and for our children to thrive.”
The bill restructures Personal Income Tax Rates, it reduces the Capital Gains Tax and it flattens the Corporate Income Tax to 5-point-9 percent.
It also creates a new GRT reduction for childcare assistance, expands the Rural Healthcare Practitioner tax credit and creates an Electric Vehicles Tax Credit of $2,500 per vehicle.
The bill increases the Alcohol Excise Tax and the tobacco tax.
One area that might produce some contention with Governor Michelle Lujan Grisham is the rebate that would be heading to New Mexicans. The Governor had proposed sending refunds of $750 for single taxpayers and $1500 for joint filers but the Lente says that would have eaten up too much of the surplus so the committee agreed to rebates of $300 and $600.
While Republicans on the committee praised lawmakers’ work saying there things to like in the bill they couldn’t support the final package.
Rep. Jason Harper had hoped to see an end to pyramiding with the GRT, but many municipal and county leaders had asked the committee not to do it without having a way to replace what would be a lot of lost revenue.
Albuquerque Chamber of Commerce CEO Terri Cole urged legislators to reject the bundled tax changes, arguing that even selective rate increases are unnecessary amid a multibillion-dollar budget surplus.