Proposed tax credit proposal would expand benefits to more than 100K low-income New Mexicans

Yahoo

13-02-2025

A state and federal tax credit pairing designed to help low-income New Mexicans could grow by 100,000 people if one legislative proposal wins approval.
House Bill 14, a measure that would allow those taxpayers to take advantage of the such benefits, would encourage better workforce participation, reduce poverty and improve outcomes for children, the bill's co-sponsor, Rep. Derrick Lente, D-Sandia Pueblo, told lawmakers Wednesday.
The House Commerce and Economic Development Committee voted 10-0 to advance HB 14, which would replace the Working Families Tax Credit, which supplements the federal Earned Income Tax Credit by matching 25% of it.
The bill would replace the Working Families Tax Credit with a state version of the Earned Income Tax Credit, which in turn would effectively amount to about 30% of the federal credit. The new credit would also expand eligibility for more low-income taxpayers across the board, particularly for those without children, according to a Legislative Finance Committee analysis.
'HB 14 furthers the strategy and provides a way for New Mexico to continue to invest in improving the quality of life for all New Mexicans, especially those that are single filers and those that are lower- to middle-income folks,' Lente said.
The income ceiling for single taxpayers with no children under the current credits is $17,640, according to a Legislative Finance Committee analysis. That would grow to $35,300 under the bill. For married couples with two children, the ceiling would grow from $59,478 to $69,250.
The state Taxation and Revenue Department estimates 101,865 new taxpayers would be eligible for the expanded Earned Income Tax Credit.
The question of how much the new credit would cost state coffers depends on who you ask.
LFC analysts put the cost of HB 14 at $73.3 million in the coming fiscal year in recurring revenue from the state's general fund, and $78.3 million by fiscal year 2029.
The Taxation and Revenue Department, though, put the cost far lower, growing from $42.7 million in the coming fiscal year to $48 million in fiscal year 2029.
The Working Families Tax Credit has been lauded by advocacy groups as a measure that has helped lift more of New Mexico's families and children out of poverty.
Replacing that tax credit with the expanded state Earned Income Tax Credit would help continue that trend, said Paige Knight, a deputy policy director at New Mexico Voices for Children.
HB 14 would allow 'more families to put food on the table, to pay their bills and to be better positioned to secure economic stability,' she said in an interview.
In a written statement, House Speaker Javier Martínez, another co-sponsor of HB 14, said the legislation builds on the state's previous progress of passing worker and family-friendly policies.
'As the chaos in Washington, D.C. worsens rising costs, it's especially important that we do whatever we can to relieve the pressures on working people,' he wrote.