Governor enacts state tax cuts

No more state tax on Social Security benefits for most New Mexicans. That’s one of the actions Gov. Michelle Lujan Grisham approved by signing House Bill 163 into law Wednesday.

The bill, sponsored by Democrats, also cuts New Mexico’s gross receipts tax rate for the first time in 40 years. The action cuts the tax by an eighth of a percent starting July 1 and then a quarter of a percent reduction in July 2023.

Also included in HB 163: a refundable child tax credit of up to $175 per child, a one-time refundable tax rebate of $500 for married couples filing joint returns and $250 for single filers and a three year state tax exemption for military retirees.

The bill also includes a one-time $1,000 income tax credit for tax year 2022 for full-time hospital nurses and a new gross receipts tax deduction for certain professional services sold to manufacturers, a move seen as a way to make New Mexico businesses more competitive, according to a news release from the governor’s office staff.

There are certain limits included in the measure, for instance, single income tax filers who make $100,000 a year or more and married couples filing jointly who make over $150,000 will still have to pay a state tax on their social security income.

Area Sen. Pat Woods, R-Broadview, wanted a bigger tax rebate to go to state taxpayers.

“I had been trying to get a simple $1,000 per person tax rebate and a Social Security tax exemption just like the one that passed,” Woods said.

“We wanted more but we were told by the opposition it was too much so the governor signed what she signed,” Woods said.

The tax rebate in HB 163 is $250 per person.

Woods also believes a $1,000 rebate would have benefited every day New Mexicans far better than the gross receipts tax reduction in HB 163.

“If you spend $50,000 you’ll save $125 with this tax cut,” Woods said. “Let’s say you spend $5,000 in one month. You’re only going to save $12.50.”

“The gross receipts tax doesn’t benefit most New Mexico taxpayers,” Woods said. “It benefits big business. I like big business, I’m just pointing out a bigger rebate would’ve been better.”

District 67 Rep. Jack Chatfield, R-Mosquero, believes the gross receipts tax is an “onerous” tax.

“I think we need to do away with it,” Chatfield said. “We are one of the few states in the nation that have a gross receipts tax.”

“Money loses its purchasing power because of this tax,” Chatfield said. “It’s the pyramiding effect. If I pay for something I have to pay gross receipts, if I sub-contract for a project then that contractor has to pay gross receipts and so on.”

Speaking on HB 163’s other provisions Chatfield said “The child tax credit is good.”

Regarding the dropping of the tax on Social Security income Chatfield said, “It’s a good step in the right direction.

“We shouldn’t be taxing Social Security,” Chatfield said. “It’s not fair to tax people’s Social Security; they’ve already paid on that.”

“These are things we’ve been working on for years,” Chatfield said. “It’s interesting how suddenly in an election year, how amazing it is that the governor turns conservative.”