By NATHAN BROWN and ROBERT NOTT
The Santa Fe New Mexican
An omnibus tax package that would cut income tax rates for most New Mexicans is headed to the governor’s desk.
The House of Representatives, in a 37-29 concurrence vote late Tuesday night, approved changes to House Bill 252 made in the Senate. The measure, which includes an extensive list of changes to the state’s tax system, would cost an estimated $217 million in fiscal year 2025.
HB 252 overhauls the state’s tax brackets, offering the most significant rate cuts to the lowest-income earners. It also establishes a range of tax credits and deductions for workers and businesses, including a credit of up to $50,000 for people who are rebuilding homes destroyed by wildfire and a credit for the purchase of an electric vehicle or charging unit.
“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,” the bill’s sponsor, House Taxation and Revenue Committee Chairman Derrick Lente, D-Sandia Pueblo, said in a statement. “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.”
During Tuesday night’s debate, House Appropriations and Finance Committee Chairman Nathan Small, D-Las Cruces, and others acknowledged the bill wasn’t perfect. However, they praised aspects of it, such as tax credits for veterans and a half-billion dollars in clean energy incentives.
“I see a lot of our values reflected in this and I very much appreciate this,” sad Rep. Kathleen Cates, D-Rio Rancho.
Representatives from both parties expressed what they called “heartburn,” however, about the Senate’s changes to the bill.
“I do not like this process due to the fact that we are forced, in a sense — not forced, that’s a strong word — but we should have these bills come to us individually and vote upon them individually for many reasons,” Rep. Tara Lujan, D-Santa Fe said.
“It’s giving me some pause here to see some of these things,” Lujan added.
Rep. Jason Harper, R-Rio Rancho, accused the Senate of breaking an agreement to hold a joint hearing to develop a tax package.
“That’s not what happened here,” he said. “The Senate added bills that we have not seen … and we have not had an opportunity to vet them here in the House. I count eight new items in this package.”
He called the bill “a complete giveaway” and a “Christmas tree bill” and urged his colleagues to reject it and work with the Senate in a conference committee to come up with a better bill.
“What the Senate did was not right,” Harper said. “They broke the agreement and they do not control the legislative branch in New Mexico. … The Senate just expected us to take what they are jamming down our throat.”
House Democrats issued a news release Wednesday morning highlighting the fact that the bill cuts personal income taxes for everyone, “with the greatest rate cuts for the lowest earners,” while capping the capital gains tax deduction “that overwhelmingly benefits the state’s highest earners” at $2,500.
The bill also flattens the state’s corporate income tax rate at 5.9%, which Democrats said would equal a $500-per-year increase for businesses with incomes less than $500,000.
House Democrats also highlighted a long list of new tax credits built into the bill, such as the new Fire Recovery Income Tax Credit and a gross receipts tax deduction of up to $5 million a year for legal services to help victims of the Hermits Peak/Calf Canyon Fire receive federal compensation.
The bill also expands the Rural Health Care Practitioner Tax Credit and lets teachers deduct up to $1,000 a year to pay for school supplies.
It includes several new environmentally friendly credits, including a new geothermal electricity tax credit and a new tax credit for solar and wind energy manufacturers.
