HOUSE BILL 106

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Mark Duncan

 

 

 

 

 

AN ACT

RELATING TO TAXATION; CREATING THE HOME-BASED CHILD CARE INCOME TAX CREDIT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new section of the Income Tax Act is enacted to read:

     "[NEW MATERIAL] HOME-BASED CHILD CARE INCOME TAX CREDIT.--

          A. A taxpayer who files an individual New Mexico income tax return, is not a dependent of another individual and does not enroll the taxpayer's dependent child in a state-funded or private child care facility or a state-funded or private pre-kindergarten program may claim a credit against the taxpayer's tax liability imposed pursuant to the provisions of the Income Tax Act. The credit authorized pursuant to this section may be referred to as the "home-based child care income tax credit".

          B. Except as provided in Subsection D of this section, the amount of credit shall be in the amount of one thousand dollars ($1,000) per month for each month the dependent child is not eligible to enroll in public school.

          C. A taxpayer shall apply for certification of eligibility for the tax credit from the early childhood education and care department on forms and in the manner prescribed by that department. Except as provided by Subsection F of this section, only one tax credit shall be certified per dependent child not enrolled in a state-funded or private pre-kindergarten program per month. The early childhood education and care department may issue rules governing the procedure for administering the provisions of this subsection. The early childhood education and care department shall provide the department with the certificates of eligibility issued pursuant to this subsection in an electronic format at regularly agreed-upon intervals.

          D. For the 2027 taxable year and each subsequent taxable year, the amount of credit provided in Subsection B of this section shall be adjusted to account for inflation. The department shall make the adjustment by multiplying the credit amount by a fraction, the numerator of which is the consumer price index ending during the prior taxable year and the denominator of which is the consumer price index ending in tax year 2025. The result of the multiplication shall be rounded down to the nearest one dollar ($1.00), except that if the result would be an amount less than the corresponding amount for the preceding taxable year, then an adjustment shall not be made.

          E. That portion of the home-based child care income tax credit claimed by a taxpayer that exceeds the taxpayer's income tax liability in the taxable year in which the home-based child care income tax credit is claimed shall be refunded to the taxpayer.

          F. Married individuals who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the home-based child care income tax credit provided in this section that would have been allowed on a joint return.

          G. The credit provided by this section shall be included in the tax expenditure budget pursuant to Section 7-1-84 NMSA 1978, including the total annual aggregate cost of the credit.

          H. As used in this section, "dependent child" means a child who:

                (1) is a "dependent" as defined by Section 152 of the Internal Revenue Code of 1986, as that section may be amended or renumbered, but also includes any minor child or stepchild of the taxpayer who would be a dependent for federal income tax purposes if the public assistance contributing to the support of the child or stepchild was considered to have been contributed by the taxpayer; and

                (2) is age five or younger."

     SECTION 2. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2026.

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