House Bill text for HB0618

HOUSE BILL 618

48th legislature - STATE OF NEW MEXICO - second session, 2008

INTRODUCED BY

Edward C. Sandoval

AN ACT

RELATING TO TAXATION; PROVIDING RULES FOR INDEXING OF AMOUNTS FOR INFLATION; CHANGING CERTAIN PROVISIONS OF THE INCOME TAX ACT TO CONSOLIDATE PROVISIONS DESCRIBING DETERMINATION OF TAXABLE INCOME; PROVIDING AN INCOME TAX CREDIT BASED ON FILING STATUS, PERSONAL EXEMPTIONS AND TAXABLE INCOME; AMENDING, REPEALING AND ENACTING CERTAIN SECTIONS OF THE NMSA 1978.

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

Section 1. A new section of the Tax Administration Act, Section 7-1-83 NMSA 1978, is enacted to read:

"7-1-83. [NEW MATERIAL] INDEXING AMOUNTS FOR INFLATION.--The dollar value of an amount used to specify a tax, credit, rebate or other provision that is indexed for inflation pursuant to this section shall be adjusted each calendar year subsequent to the base year according to the following rules:

A. to determine the dollar value of an amount for a calendar year, the dollar value of the amount in the base year shall be multiplied by the inflation adjustment factor determined pursuant to Subsection B of this section and then rounded according to the rules in Subsection D of this section;

B. the inflation adjustment factor for a calendar year is the quotient of a fraction:

(1) the numerator of which is the sum of the monthly consumer price index values for the twelve months ending in August of the preceding calendar year; and

(2) the denominator of which is the sum of the monthly consumer price index values for the twelve months ending in August of the year preceding the base year;

C. as used in this section, the "consumer price index" is the last consumer price index published by the United States department of labor for all urban consumers, for all items and for the current series; and

D. the amount determined under Subsection A of this section, before rounding, shall be rounded according to the following rules:

(1) if the amount is no more than five hundred dollars ($500) to the nearest one dollar ($1.00);

(2) if the amount is more than five hundred dollars ($500) but no more than five thousand dollars ($5,000), to the nearest five dollars ($5.00);

(3) if the amount is more than five thousand dollars ($5,000) but no more than fifty thousand dollars ($50,000), to the nearest fifty dollars ($50.00); and

(4) if the amount is more than fifty thousand dollars ($50,000), to the nearest five hundred dollars ($500)."

Section 2. Section 7-2-2 NMSA 1978 (being Laws 1986, Chapter 20, Section 26, as amended) is amended to read:

"7-2-2. DEFINITIONS.--For the purpose of the Income Tax Act and unless the context requires otherwise:

A. "adjusted gross income" means adjusted gross income as defined in Section 62 of the Internal Revenue Code [as that section may be amended or renumbered];

B. "base income":

(1) means, for estates and trusts, that part of the estate's or trust's income defined as taxable income and upon which the federal income tax is calculated in the Internal Revenue Code for income tax purposes [plus, for taxable years beginning on or after January 1, 1991, the amount of the net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code, as that section may be amended or renumbered, and taken by the taxpayer for that year]; and

(2) means, for taxpayers other than estates or trusts, that part of the taxpayer's income defined as adjusted gross income [plus, for taxable years beginning on or after January 1, 1991, the amount of the net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code, as that section may be amended or renumbered, and taken by the taxpayer for that year;

(3) includes, for all taxpayers, any other income of the taxpayer not included in adjusted gross income but upon which a federal tax is calculated pursuant to the Internal Revenue Code for income tax purposes, except amounts for which a calculation of tax is made pursuant to Section 55 of the Internal Revenue Code, as that section may be amended or renumbered; "base income" also includes interest received on a state or local bond; and

(4) includes, for all taxpayers, an amount deducted pursuant to Section 7-2-32 NMSA 1978 in a prior taxable year if:

(a) such amount is transferred to another qualified tuition program, as defined in Section 529 of the Internal Revenue Code, not authorized in the Education Trust Act; or

(b) a distribution or refund is made for any reason other than: 1) to pay for qualified higher education expenses, as defined pursuant to Section 529 of the Internal Revenue Code; or 2) upon the beneficiary's death, disability or receipt of a scholarship];

C. "compensation" means wages, salaries, commissions and any other form of remuneration paid to employees for personal services;

D. "department" means the taxation and revenue department, the secretary or any employee of the department exercising authority lawfully delegated to that employee by the secretary;

E. "dependent" means "dependent" as defined by Section 152 of the Internal Revenue Code;

[E.] F. "fiduciary" means a guardian, trustee, executor, administrator, committee, conservator, receiver, individual or corporation acting in any fiduciary capacity;

[F.] G. "filing status" means ["married filing joint returns", "married filing separate returns", "head of household", "surviving spouse" and "single", as those terms are generally defined for federal tax purposes] the taxpayer's marital and family status, which may be one of the following:

(1) "married individuals filing joint returns" or "married filing jointly" means married individuals eligible to file a federal income tax return jointly with the taxpayer's spouse pursuant to Section 6013 of the Internal Revenue Code;

(2) "married individuals filing separate returns" or "married filing separately" means a married taxpayer not filing a federal income tax return jointly with the taxpayer's spouse;

(3) "head of household" means "head of household" as that term is defined by Section 2(b) of the Internal Revenue Code;

(4) "surviving spouse" means "surviving spouse" as that term is defined by Section 2(a) of the Internal Revenue Code; and

(5) "single" means an unmarried individual not a head of household or surviving spouse;

H. "first year resident" means an individual who moves to New Mexico with the intent to make this state the individual's permanent residence;

[G.] I. "fiscal year" means any accounting period of twelve months ending on the last day of any month other than December;

[H. "head of household" means "head of household" as generally defined for federal income tax purposes;

I.] J. "individual" means a natural person, an estate, a trust or a fiduciary acting for a natural person, trust or estate;

[J.] K. "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as that code may be amended or its sections renumbered;

[K. "lump-sum amount" means for the purpose of determining liability for federal income tax, an amount that was not included in adjusted gross income but upon which the five-year-averaging or the ten-year-averaging method of tax computation provided in Section 402 of the Internal Revenue Code, as that section may be amended or renumbered, was applied;]

L. "modified gross income" means [all income of the taxpayer and, if any, the taxpayer's spouse and dependents, undiminished by losses and from whatever source, including:

(1) compensation;

(2) net profit from business;

(3) gains from dealings in property;

(4) interest;

(5) net rents;

(6) royalties;

(7) dividends;

(8) alimony and separate maintenance payments;

(9) annuities;

(10) income from life insurance and endowment contracts;

(11) pensions;

(12) discharge of indebtedness;

(13) distributive share of partnership income;

(14) income in respect of a decedent;

(15) income from an interest in an estate or a trust;

(16) social security benefits;

(17) unemployment compensation benefits;

(18) workers' compensation benefits;

(19) public assistance and welfare benefits;

(20) cost-of-living allowances; and

(21) gifts] the sum of the taxpayer's adjusted gross income, the adjusted gross income, if any, of the taxpayer's spouse and dependents and any amount not included in the taxpayer's, spouse's or dependent's adjusted gross income pursuant to Section 86 of the Internal Revenue Code; [M.] "modified gross income" [excludes] does not include:

(1) payments for hospital, dental, medical or drug expenses to or on behalf of the taxpayer;

(2) the value of room and board provided by federal, state or local governments or by private individuals or agencies based upon financial need and not as a form of compensation;

(3) payments pursuant to a federal, state or local government program directly or indirectly to a third party on behalf of the taxpayer when identified to a particular use or invoice by the payer; or

(4) payments for credits and rebates pursuant to the Income Tax Act and made for a credit pursuant to Section 7-3-9 NMSA 1978;

[N. "net income" means, for estates and trusts, base income adjusted to exclude amounts that the state is prohibited from taxing because of the laws or constitution of this state or the United States and means, for taxpayers other than estates or trusts, base income adjusted to exclude:

(1) an amount equal to the standard deduction allowed the taxpayer for the taxpayer's taxable year by Section 63 of the Internal Revenue Code, as that section may be amended or renumbered;

(2) an amount equal to the itemized deductions defined in Section 63 of the Internal Revenue Code, as that section may be amended or renumbered, allowed the taxpayer for the taxpayer's taxable year less the amount excluded pursuant to Paragraph (1) of this subsection;

(3) an amount equal to the product of the exemption amount allowed for the taxpayer's taxable year by Section 151 of the Internal Revenue Code, as that section may be amended or renumbered, multiplied by the number of personal exemptions allowed for federal income tax purposes;

(4) income from obligations of the United States of America less expenses incurred to earn that income;

(5) other amounts that the state is prohibited from taxing because of the laws or constitution of this state or the United States;

(6) for taxable years that began prior to January 1, 1991, an amount equal to the sum of:

(a) net operating loss carryback deductions to that year from taxable years beginning prior to January 1, 1991 claimed and allowed, as provided by the Internal Revenue Code; and

(b) net operating loss carryover deductions to that year claimed and allowed; and

(7) for taxable years beginning on or after January 1, 1991, an amount equal to the sum of any net operating loss carryover deductions to that year claimed and allowed, provided that the amount of any net operating loss carryover from a taxable year beginning on or after January 1, 1991 may be excluded only as follows:

(a) in the case of a timely filed return, in the taxable year immediately following the taxable year for which the return is filed; or

(b) in the case of amended returns or original returns not timely filed, in the first taxable year beginning after the date on which the return or amended return establishing the net operating loss is filed; and

(c) in either case, if the net operating loss carryover exceeds the amount of net income exclusive of the net operating loss carryover for the taxable year to which the exclusion first applies, in the next four succeeding taxable years in turn until the net operating loss carryover is exhausted; in no event shall a net operating loss carryover be excluded in any taxable year after the fourth taxable year beginning after the taxable year to which the exclusion first applies;

O.] M. "net operating loss" means any net operating loss, as defined by Section 172(c) of the Internal Revenue Code [as that section may be amended or renumbered] for a taxable year as further increased by the income, if any, from obligations of the United States for that year less related expenses;

[P.] N. "net operating loss carryover" means the amount, or any portion of the amount, of a net operating loss for any taxable year that, pursuant to [Paragraph (6) or (7) of Subsection N of this section] Subsection D of Section 7-2-4 NMSA 1978, may be excluded from base income;

[Q.] O. "nonresident" means every individual not a resident of [this state] New Mexico;

[R. "person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, joint venture, syndicate or other association; "person" also means, to the extent permitted by law, any federal, state or other governmental unit or subdivision or agency, department or instrumentality thereof;]

P. "personal exemption" means a taxpayer, a spouse or a dependent that qualifies the taxpayer for a deduction for personal exemptions pursuant to Section 151 of the Internal Revenue Code;

[S.] Q. "resident" means an individual who is domiciled in [this state] New Mexico during any part of the taxable year or an individual who is physically present in [this state] New Mexico for one hundred eighty-five days or more during the taxable year; but any individual, other than someone who was physically present in [the state] New Mexico for one hundred eighty-five days or more during the taxable year, who, on or before the last day of the taxable year, changed the individual's place of abode to a place without [this state] New Mexico with the bona fide intention of continuing actually to abide permanently without [this state] New Mexico is not a resident for the purposes of the Income Tax Act for periods after that change of abode;

[T.] R. "secretary" means the secretary of taxation and revenue or the secretary's delegate;

[U.] S. "state" means any state of the United States, the District of Columbia, the commonwealth of Puerto Rico, any territory or possession of the United States or any political subdivision of a foreign country;

[V.] T. "state or local bond" means a bond issued by a state other than New Mexico or by a local government other than one of New Mexico's political subdivisions, the interest from which is excluded from income for federal income tax purposes under Section 103 of the Internal Revenue Code; [as that section may be amended or renumbered;

W. "surviving spouse" means "surviving spouse" as generally defined for federal income tax purposes;

X.] U. "taxable income" means [net income less any lump-sum amount] base income plus the additions to base income set forth in Section 7-2-3.1 NMSA 1978 less the exemptions set forth in Sections 7-2-4, 7-2-5.2, 7-2-5.5, 7-2-5.6, 7-2-5.7, 7-2-5.9, 7-2-5.10 and 7-2-5.11 NMSA 1978 or any other section of the Income Tax Act creating an exemption effective after June 30, 2008 and less the deductions set forth in Sections 7-2-32, 7-2-34, 7-2-36 and 7-2-37 NMSA 1978 or any other section of the Income Tax Act creating a deduction effective after June 30, 2008;

[Y.] V. "taxable year" means the calendar year or fiscal year upon the basis of which the [net] taxable income is computed under the Income Tax Act and includes, in the case of the return made for a fractional part of a year under the provisions of the Income Tax Act, the period for which the return is made; and

[Z.] W. "taxpayer" means any individual subject to the tax imposed or eligible for a credit authorized by the Income Tax Act."

Section 3. Section 7-2-3 NMSA 1978 (being Laws 1965, Chapter 202, Section 3, as amended) is amended to read:

"7-2-3. IMPOSITION AND LEVY OF TAX.--A tax is imposed at the rates specified in the Income Tax Act upon the [net] taxable income of every resident individual and upon the [net] taxable income of every nonresident individual employed or engaged in the transaction of business in, into or from [this state] New Mexico or deriving any income from any property or employment within [this state] New Mexico."

Section 4. A new section of the Income Tax Act, Section 7-2-3.1 NMSA 1978, is enacted to read:

"7-2-3.1. [NEW MATERIAL] ADDITIONS TO FEDERAL TAXABLE INCOME OR ADJUSTED GROSS INCOME.--The following amounts shall be added to the taxpayer's federal taxable income or adjusted gross income, as appropriate:

A. for taxable years beginning on or after January 1, 1991, the amount of the net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code and taken by the taxpayer for that year;

B. any other income of the taxpayer not included in base income but upon which a federal tax is calculated pursuant to the Internal Revenue Code for income tax purposes, except amounts for which a calculation of tax is made pursuant to Section 55 of the Internal Revenue Code;

C. interest received on a state or local bond; and

D. an amount deducted pursuant to Section 7-2-32 NMSA 1978 in a prior taxable year if:

(1) the amount is transferred to another qualified tuition program, as defined in Section 529 of the Internal Revenue Code, not authorized in the federal Education Trust Act; or

(2) a distribution or refund is made for any reason other than:

(a) to pay for qualified higher education expenses, as defined pursuant to Section 529 of the Internal Revenue Code; or

(b) upon the beneficiary's death, disability or receipt of a scholarship."

Section 5. Section 7-2-4 NMSA 1978 (being Laws 1965, Chapter 202, Section 4, as amended) is amended to read:

"7-2-4. EXEMPTIONS.--No income tax shall be imposed upon:

A. the income of a trust organized or created in the United States and forming part of a stock bonus, pension or profit-sharing plan of an employer for the exclusive benefit of [his] the employer's employees or their beneficiaries, which trust is exempt from taxation under the provisions of the Internal Revenue Code; [or]

B. the income of religious, educational, benevolent or other organizations not organized for profit, which are exempt from income taxation under the Internal Revenue Code except to the extent that such income is subject to federal income taxation as "unrelated business income" under the Internal Revenue Code;

C. the income of a taxpayer from:

(1) obligations of the United States less expenses incurred to earn that income; or

(2) amounts that New Mexico is prohibited from taxing because of the laws or constitution of New Mexico or the United States constitution; or

D. for taxable years beginning on or after January 1, 1991, an amount equal to the sum of the net operating loss carryover exemptions to the taxable year that are claimed and allowed; provided, however:

(1) that the exemption is only applied:

(a) in the case of a timely filed return, in the taxable year immediately following the taxable year for which the return is filed; or

(2) if the net operating loss carryover exceeds the amount of taxable income exclusive of the net operating loss carryover for the taxable year to which the exemption first applies, the exemption shall be applied in the next four succeeding taxable years in turn until the net operating loss carryover is exhausted; in no event shall a net operating loss carryover be exempted in any taxable year after the fourth taxable year beginning after the taxable year to which the exemption first applies."

Section 6. Section 7-2-5.2 NMSA 1978 (being Laws 1985, Chapter 114, Section 1, as amended) is amended to read:

"7-2-5.2. EXEMPTION--INCOME OF PERSONS SIXTY-FIVE AND OLDER OR BLIND.--

A. Any individual sixty-five years of age or older or who, for federal income tax purposes, is blind may claim an exemption in an amount specified in Subsections [A] B through [C] D of this section not to exceed eight thousand dollars ($8,000) of income includable except for this exemption in [net] taxable income. [Individuals having income both within and without this state shall apportion this exemption in accordance with regulations of the secretary.

A.] B. For married individuals filing separate returns, for any taxable year beginning on or after January 1, 1987:

The maximum amount of

If adjusted exemption allowable under

gross income is: this section shall be:

Not over $15,000 $8,000

Over $15,000 but not over $16,500 $7,000

Over $16,500 but not over $18,000 $6,000

Over $18,000 but not over $19,500 $5,000

Over $19,500 but not over $21,000 $4,000

Over $21,000 but not over $22,500 $3,000

Over $22,500 but not over $24,000 $2,000

Over $24,000 but not over $25,500 $1,000

Over $25,500 0.

[B.] C. For heads of household, surviving spouses and married individuals filing joint returns, for any taxable year beginning on or after January 1, 1987:

The maximum amount of

If adjusted exemption allowable under

gross income is: this section shall be:

Not over $30,000 $8,000

Over $30,000 but not over $33,000 $7,000

Over $33,000 but not over $36,000 $6,000

Over $36,000 but not over $39,000 $5,000

Over $39,000 but not over $42,000 $4,000

Over $42,000 but not over $45,000 $3,000

Over $45,000 but not over $48,000 $2,000

Over $48,000 but not over $51,000 $1,000

Over $51,000 0.

[C.] D. For single individuals, for any taxable year beginning on or after January 1, 1987:

The maximum amount of

If adjusted exemption allowable under

gross income is: this section shall be:

Not over $18,000 $8,000

Over $18,000 but not over $19,500 $7,000

Over $19,500 but not over $21,000 $6,000

Over $21,000 but not over $22,500 $5,000

Over $22,500 but not over $24,000 $4,000

Over $24,000 but not over $25,500 $3,000

Over $25,500 but not over $27,000 $2,000

Over $27,000 but not over $28,500 $1,000

Over $28,500 0."

Section 7. Section 7-2-5.5 NMSA 1978 (being Laws 1995, Chapter 42, Section 1) is amended to read:

"7-2-5.5. EXEMPTION--EARNINGS BY INDIANS, THEIR INDIAN SPOUSES AND INDIAN DEPENDENTS ON INDIAN LANDS.--An individual may claim an exemption of income includable in taxable income, except for this exemption, in an amount equal to the income earned by a member of a New Mexico federally recognized Indian nation, tribe, band or pueblo, [his] the member's spouse or dependent, who is a member of a New Mexico federally recognized Indian nation, tribe [band] or pueblo, [is exempt from state income tax] if the income is earned from work performed within and the member, spouse or dependent lives within the boundaries of the Indian member's or the spouse's reservation or pueblo grant or within the boundaries of lands held in trust by the United States for the benefit of the member or spouse or [his] the member's or spouse's nation, tribe [band] or pueblo, subject to restriction against alienation imposed by the United States."

Section 8. Section 7-2-5.6 NMSA 1978 (being Laws 1995, Chapter 93, Section 8) is amended to read:

"7-2-5.6. EXEMPTION--MEDICAL CARE SAVINGS ACCOUNTS.--Except as provided in Section [6 of this act] 59A-23D-6 NMSA 1978, an individual may claim an exemption of income includable in taxable income, except for this exemption in an amount equal to employer and employee contributions to medical care savings accounts established pursuant to the Medical Care Savings Account Act, the interest earned on those accounts and money reimbursed to an employee for eligible medical expenses from those accounts or money advanced to the employee by the employer for eligible medical expenses pursuant to that act [are exempt from taxation]."

Section 9. Section 7-2-5.7 NMSA 1978 (being Laws 2002, Chapter 58, Section 1) is amended to read:

"7-2-5.7. EXEMPTION--INCOME OF INDIVIDUALS ONE HUNDRED YEARS OF AGE OR OLDER.--[The income of] An individual who is a natural person, who is one hundred years of age or older and who is not a dependent of another individual [is exempt from state income tax] may claim an exemption of all income includable in taxable income except for this exemption."

Section 10. Section 7-2-5.9 NMSA 1978 (being Laws 2005, Chapter 104, Section 6) is amended to read:

"7-2-5.9. EXEMPTION--UNREIMBURSED OR UNCOMPENSATED MEDICAL CARE EXPENSES OF INDIVIDUALS SIXTY-FIVE YEARS OF AGE OR OLDER.--

A. Any individual sixty-five years of age or older may claim an additional exemption from income includable in taxable income, except for this exemption, [in net income] in an amount equal to three thousand dollars ($3,000) for medical care expenses paid by the individual for that individual or for the individual's spouse or dependent during the taxable year if those medical care expenses exceed twenty-eight thousand dollars ($28,000) and if the medical care expenses are not reimbursed or compensated for by insurance or otherwise.

B. As used in this section:

[(1) "dependent" means "dependent" as defined in Section 152 of the Internal Revenue Code;

(2)] (1) "health care facility" means a hospital, outpatient facility, diagnostic and treatment center, rehabilitation center, freestanding hospice or other similar facility at which medical care is provided;

[(3)] (2) "medical care" means the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body;

[(4)] (3) "medical care expenses" means amounts paid for:

(a) the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body if provided by a physician or in a health care facility;

(b) prescribed drugs or insulin;

(d) insurance covering medical care, including amounts paid as premiums under Part B of Title 18 of the Social Security Act or for a qualified long-term care insurance contract defined in Section 7702B(b) of the Internal Revenue Code, if the insurance or other amount is paid from income included in the taxpayer's adjusted gross income for the taxable year;

(e) specialized treatment or the use of special therapeutic devices if the treatment or device is prescribed by a physician and the patient can show that the expense was incurred primarily for the prevention or alleviation of a physical or mental defect or illness; and

(f) care in an institution other than a hospital, such as a sanitarium or rest home, if the principal reason for the presence of the person in the institution is to receive the medical care available; provided that if the meals and lodging are furnished as a necessary part of such care, the cost of the meals and lodging are "medical care expenses";

[(5)] (4) "physician" means a medical doctor, osteopathic physician, dentist, podiatrist, chiropractic physician or psychologist licensed or certified to practice in New Mexico; and

[(6)] (5) "prescribed drug" means a drug or biological that requires a prescription of a physician for its use by an individual."

Section 11. Section 7-2-5.10 NMSA 1978 (being Laws 2006, Chapter 50, Section 1) is amended to read:

"7-2-5.10. EXEMPTION--NEW MEXICO NATIONAL GUARD MEMBER PREMIUMS PAID FOR GROUP LIFE INSURANCE.--An individual who receives reimbursement from the service members' life insurance reimbursement fund may claim an exemption in the amount of that reimbursement, from income includable in taxable income, except for this exemption [in net income]."

Section 12. Section 7-2-5.11 NMSA 1978 (being Laws 2007, Chapter 45, Section 11) is amended to read:

"7-2-5.11. EXEMPTION--ARMED FORCES SALARIES.--An individual may claim an exemption of income includable in taxable income, except for this exemption, in an amount equal to a salary paid by the United States to a taxpayer for active duty service in the armed forces of the United States [is exempt from state income taxation]."

Section 13. Section 7-2-7 NMSA 1978 (being Laws 2005, Chapter 104, Section 4) is amended to read:

"7-2-7. INDIVIDUAL INCOME TAX [RATES] RATE.--The tax imposed by Section 7-2-3 NMSA 1978 shall be imposed at the [following rates] rate of four and nine-tenths percent of taxable income for [any] a taxable year beginning on or after January 1, 2008.

[A. For married individuals filing separate returns:

If the taxable income is: The tax shall be:

Not over $4,000 1.7% of taxable income

Over $4,000 but not over $8,000 $68.00 plus 3.2% of excess over $4,000

Over $8,000 but not over $12,000 $196 plus 4.7% of excess over $8,000

Over $12,000 $384 plus 4.9% of excess over

$12,000.

B. For heads of household, surviving spouses and married individuals filing joint returns:

If the taxable income is: The tax shall be:

Not over $8,000 1.7% of taxable income

Over $8,000 but not over $16,000 $136 plus 3.2% of excess over $8,000

Over $16,000 but not over $392 plus 4.7% of

$24,000 excess over $16,000

Over $ 24,000 $768 plus 4.9% of excess over $24,000.

C. For single individuals and for estates and trusts:

If the taxable income is: The tax shall be:

Not over $5,500 1.7% of taxable income

Over $5,500 but not over $11,000 $93.50 plus 3.2% of excess over $5,500

Over $11,000 but not over $269.50 plus 4.7% of

$16,000 excess over $ 11,000

Over $16,000 $504.50 plus 4.9% of excess over $16,000.

D. The tax on the sum of any lump-sum amounts included in net income is an amount equal to five multiplied by the difference between:

(1) the amount of tax due on the taxpayer's taxable income; and

(2) the amount of tax that would be due on an amount equal to the taxpayer's taxable income and twenty percent of the taxpayer's lump-sum amounts included in net income.]"

Section 14. Section 7-2-7.1 NMSA 1978 (being Laws 1980, Chapter 102, Section 1, as amended) is amended to read:

"7-2-7.1. TAX TABLES.--In lieu of the tax rate [computations] computation required in Section 7-2-7 NMSA 1978 and the credit computations required in Section 7-2-7.4 NMSA 1978, the secretary may adopt regulations requiring taxpayers to pay taxes in accordance with tax rate tables and to claim the credit in accordance with the credit tables. The tax and credit tables may be established either by regulation or by instruction, but shall be computed substantially on the basis of the [rates] rate prescribed in Section 7-2-7 NMSA 1978 and the credit authorized in Section 7-2-7.4 NMSA 1978. The secretary may, by regulation or instruction, exclude from the application of this section taxpayers having [net] taxable incomes in excess of an amount to be determined by the secretary and may exclude taxpayers in any [net-income] taxable-income class having more personal exemptions than the number of personal exemptions specified by the secretary for that category."

Section 15. A new section of the Income Tax Act, Section 7-2-7.4 NMSA 1978, is enacted to read:

"7-2-7.4. [NEW MATERIAL] TAX CREDIT--CREDIT FOR EXEMPTIONS, DEDUCTIONS, RATE BRACKETS AND STATE AND LOCAL TAXES.--

A. A taxpayer who files an individual New Mexico income tax return may claim a credit in an amount equal to the sum of the amounts determined under Subsections B through E of this section, subject to the limitation imposed by Subsection G of this section.

B. A taxpayer who files an individual New Mexico income tax return and is not a trust, estate or dependent of another taxpayer may claim a credit in an amount determined under Paragraphs (1) through (5) of this subsection according to the taxpayer's filing status reduced by the amount determined under Paragraph (6) of this subsection.

(1) For married individuals filing separate returns with no dependents:

If taxable income is: The credit shall be:

Not over $8,950 $0.00 plus 4.90% of

the excess over $0

Over $8,950 but not over $12,950 $438.55 plus 3.20% of

the excess over $8,950

Over $12,950 but not over $16,950 $566.55 plus 1.70% of

the excess over $12,950

Over $16,950 but not over $20,950 $634.55 plus 0.20% of

the excess over $16,950

Over $20,950 $642.55.

For each dependent of the taxpayer, the taxable income amounts in the table shall all be increased by the increment amount and the percentages in the table used to determine the credit at all taxable income levels.

(2) For surviving spouses with no dependents:

If taxable income is: The credit shall be:

Not over $14,400 $0.00 plus 4.90% of

the excess over $0

Over $14,400 but not over $22,400 $705.60 plus 3.20% of

the excess over $14,400

Over $22,400 but not over $30,400 $961.60 plus 1.70% of

the excess over $22,400

Over $30,400 but not over $38,400 $1,097.60 plus 0.20% of

the excess over $30,400

Over $38,400 $1,113.60.

(3) For married individuals filing joint returns with no dependents:

If taxable income is: The credit shall be:

Not over $17,900 $0.00 plus 4.90% of

the excess over $0

Over $17,900 but not over $25,900 $877.10 plus 3.20% of

the excess over $17,900

Over $25,900 but not over $33,900 $1,133.10 plus 1.70% of

the excess over $25,900

Over $33,900 but not over $41,900 $1,269.10 plus 0.20% of

the excess over $33,900

Over $41,900 $1,285.10.

(4) For single individuals with no dependents:

If taxable income is: The credit shall be:

Not over $8,950 $0.00 plus 4.90% of

the excess over $0

Over $8,950 but not over $14,450 $438.55 plus 3.20% of

the excess over $8,950

Over $14,450 but not over $19,950 $641.55 plus 1.70% of

the excess over $14,450

Over $19,950 but not over $24,950 $708.05 plus 0.20% of

the excess over $19,950

Over $24,950 $718.05.

(5) For heads of household with no dependents:

If taxable income is: The credit shall be:

Not over $11,500 $0.00 plus 4.90% of

the excess over $0

Over $11,500 but not over $19,500 $563.50 plus 3.20% of

the excess over $11,500

Over $19,500 but not over $27,500 $819.50 plus 1.70% of

the excess over $19,500

Over $27,500 but not over $35,500 $955.50 plus 0.20% of

the excess over $27,500

Over $35,500 $971.50.

(6) For 2008 and 2009, the amount of the credit determined under Paragraphs (1) through (5) of this subsection shall be reduced, but not below zero, by the amount equal to the product of four and nine-tenths percent and the amount of the reduction in the deduction for personal exemptions determined pursuant to Section 151(d)(3) of the Internal Revenue Code.

(7) For purposes of this subsection, the increment amount is three thousand five hundred dollars ($3,500).

(8) For 2010 and subsequent years, the taxable income amounts in the tables in Paragraphs (1) through (5) of this subsection and the increment amount in Paragraph (7) of this subsection shall be indexed for inflation under the provisions of Section 7-1-83 NMSA 1978 using 2009 as the base year, and the credit amounts at each taxable income level in each table shall be recomputed using the percentages in the table.

C. A taxpayer who files an individual New Mexico income tax return and is a trust, estate or dependent of another taxpayer may claim a credit in the following amount:

If taxable income is: The credit shall be:

Not over $5,500 $0.00 plus 3.20% of

the excess over $0

Over $5,500 but not over $11,000 $176.00 plus 1.70% of

the excess over $5,500

Over $11,000 but not over $16,000 $269.50 plus 0.20% of

the excess over $11,000

Over $16,000 $279.50.

For 2010 and subsequent years, the taxable income amounts in the table shall be indexed for inflation under the provisions of Section 7-1-83 NMSA 1978 using 2009 as the base year, and the credit amounts at each taxable income level recomputed using the percentages in the table.

D. A taxpayer who files an individual New Mexico income tax return and is not a trust, estate or dependent of another taxpayer may claim a credit in an amount determined under Paragraphs (1) through (5) of this subsection according to the taxpayer's filing status.

(1) For married individuals filing separate returns with:

(a) one personal exemption:

If taxable income is: The credit shall be:

Not over $8,950 $0.00

Over $8,950 but not over $11,450 $0.00 plus 1.70% of

the excess over $8,950

Over $11,450 but not over $12,950 $42.50 plus 0.00% of

the excess over $11,450

Over $12,950 but not over $15,000 $42.50 plus 1.50% of

the excess over $12,950

Over $15,000 but not over $15,380 $73.25 plus 1.16% of

the excess over $15,000

Over $15,380 but not over $16,950 $77.66 less 0.64% of

the excess over $15,380

Over $16,950 but not over $18,710 $67.61 plus 0.86% of

the excess over $16,950

Over $18,710 but not over $20,950 $82.75 less 0.94% of

the excess over $18,710

Over $20,950 but not over $22,040 $61.69 less 0.74% of

the excess over $20,950

Over $22,040 but not over $27,512 $53.62 less 0.98% of

the excess over $22,040

Over $27,512 $0.00;

(b) two personal exemptions:

If taxable income is: The credit shall be:

Not over $12,450 $0.00

Over $12,450 but not over $16,450 $0.00 plus 1.70% of

the excess over $12,450

Over $16,450 but not over $16,750 $68.00 plus 3.20% of

the excess over $16,450

Over $16,750 but not over $19,610 $77.60 plus 0.82% of

the excess over $16,750

Over $19,610 but not over $20,450 $101.05 less 1.28% of

the excess over $19,610

Over $20,450 but not over $22,460 $90.30 plus 0.22% of

the excess over $20,450

Over $22,460 but not over $24,450 $94.72 less 1.88% of

the excess over $22,460

Over $24,450 but not over $25,320 $57.31 less 1.68% of

the excess over $24,450

Over $25,320 but not over $27,498 $42.69 less 1.96% of

the excess over $25,320

Over $27,498 $0.00;

If taxable income is: The credit shall be:

Not over $15,950 $0.00

Over $15,950 but not over $19,950 $0.00 plus 1.70% of

the excess over $15,950

Over $19,950 but not over $20,280 $68.00 plus 3.20% of

the excess over $19,950

Over $20,280 but not over $22,780 $78.56 plus 0.48% of

the excess over $20,280

Over $22,780 but not over $23,950 $90.56 less 1.92% of the excess over $22,780

Over $23,950 but not over $25,280 $68.10 less 0.42% of

the excess over $23,950

Over $25,280 but not over $27,497 $62.51 less 2.82% of

the excess over $25,280

Over $27,497 $0.00;

(d) four personal exemptions:

If taxable income is: The credit shall be:

Not over $19,450 $0.00

Over $19,450 but not over $23,030 $0.00 plus 1.70% of

the excess over $19,450

Over $23,030 but not over $23,450 $60.86 less 1.36% of

the excess over $23,030

Over $23,450 but not over $25,250 $55.15 plus 0.14% of

the excess over $23,450

Over $25,250 but not over $27,450 $57.67 less 2.56% of

the excess over $25,250

Over $27,450 but not over $27,470 $1.35 less 1.06% of

the excess over $27,450

Over $27,470 but not over $27,500 $1.14 less 3.76% of

the excess over $27,470

Over $27,500 $0.00;

(e) five personal exemptions:

If taxable income is: The credit shall be:

Not over $0.00 $0.00

Over $22,950 but not over $25,230 $0.00 plus 1.70% of

the excess over $22,950

Over $25,230 but not over $26,950 $38.76 less 1.70% of

the excess over $25,230

Over $26,950 but not over $27,230 $9.52 less 0.20% of

the excess over $26,950

Over $27,230 but not over $27,510 $8.96 less 3.20% of

the excess over $27,230

Over $27,510 $0.00;

(f) six personal exemptions:

If taxable income is: The credit shall be:

Not over $26,450 $0.00

Over $26,450 but not over $27,020 $0.00 plus 1.70% of

the excess over $26,450

Over $27,020 but not over $27,495 $9.69 less 2.04% of

the excess over $27,020

Over $27,495 $0.00; and

(g) seven or more personal exemptions, the credit is zero dollars ($0.00).

(2) For surviving spouses with:

(a) one personal exemption:

If taxable income is: The credit shall be:

Not over $14,400 $0.00

Over $14,400 but not over $16,900 $0.00 plus 1.70% of

the excess over $14,400

Over $16,900 but not over $22,400 $42.50 plus 0.00% of

the excess over $16,900

Over $22,400 but not over $24,900 $42.50 plus 1.50% of

the excess over $22,400

Over $24,900 but not over $30,000 $80.00 plus 0.00% of

the excess over $24,900

Over $30,000 but not over $30,400 $80.00 less 0.32% of

the excess over $30,000

Over $30,400 but not over $32,640 $78.72 plus 1.18% of

the excess over $30,400

Over $32,640 but not over $38,400 $105.15 less 0.47% of

the excess over $32,640

Over $38,400 but not over $39,910 $78.08 less 0.27% of

the excess over $38,400

Over $39,910 but not over $55,013 $74.00 less 0.49% of

the excess over $39,910

Over $55,013 $0.00;

(b) two personal exemptions:

If taxable income is: The credit shall be:

Not over $17,900 $0.00

Over $17,900 but not over $22,900 $0.00 plus 1.70% of

the excess over $17,900

Over $22,900 but not over $25,900 $85.00 plus 0.00% of

the excess over $22,900

Over $25,900 but not over $30,000 $85.00 plus 1.50% of

the excess over $25,900

Over $30,000 but not over $30,750 $146.50 plus 1.16% of

the excess over $30,000

Over $30,750 but not over $33,900 $155.20 less 0.64% of

the excess over $30,750

Over $33,900 but not over $37,420 $135.04 plus 0.86% of

the excess over $33,900

Over $37,420 but not over $41,900 $165.31 less 0.94% of

the excess over $37,420

Over $41,900 but not over $44,080 $123.20 less 0.74% of

the excess over $41,900

Over $44,080 but not over $55,005 $107.07 less 0.98% of

the excess over $44,080

Over $55,005 $0.00;

If taxable income is: The credit shall be:

Not over $21,400 $0.00

Over $21,400 but not over $28,900 $0.00 plus 1.70% of

the excess over $21,400

Over $28,900 but not over $29,400 $127.50 plus 0.00% of

the excess over $28,900

Over $29,400 but not over $30,000 $127.50 plus 1.50% of

the excess over $29,400

Over $30,000 but not over $35,310 $136.50 plus 0.99% of

the excess over $30,000

Over $35,310 but not over $37,400 $189.07 less 0.96% of

the excess over $35,310

Over $37,400 but not over $41,460 $169.01 plus 0.54% of

the excess over $37,400

Over $41,460 but not over $45,400 $190.93 less 1.41% of

the excess over $41,460

Over $45,400 but not over $47,620 $135.38 less 1.21% of

the excess over $45,400

Over $47,620 but not over $55,002 $108.51 less 1.47% of

the excess over $47,620

Over $55,002 $0.00;

(d) four personal exemptions:

If taxable income is: The credit shall be:

Not over $24,900 $0.00

Over $24,900 but not over $32,900 $0.00 plus 1.70% of

the excess over $24,900

Over $32,900 but not over $33,500 $136.00 plus 3.20% of

the excess over $32,900

Over $33,500 but not over $39,210 $155.20 plus 0.82% of

the excess over $33,500

Over $39,210 but not over $40,900 $202.02 less 1.28% of

the excess over $39,210

Over $40,900 but not over $44,930 $180.39 plus 0.22% of

the excess over $40,900

Over $44,930 but not over $48,900 $189.26 less 1.88% of

the excess over $44,930

Over $48,900 but not over $50,640 $114.62 less 1.68% of

the excess over $48,900

Over $50,640 but not over $54,997 $85.39 less 1.96% of the excess over $50,640

Over $54,997 $0.00;

(e) five personal exemptions:

If taxable income is: The credit shall be:

Not over $28,400 $0.00

Over $28,400 but not over $36,400 $0.00 plus 1.70% of

the excess over $28,400

Over $36,400 but not over $37,270 $136.00 plus 3.20% of

the excess over $36,400

Over $37,270 but not over $42,600 $163.84 plus 0.65% of

the excess over $37,270

Over $42,600 but not over $44,400 $198.49 less 1.60% of

the excess over $42,600

Over $44,400 but not over $47,930 $169.69 less 0.10% of

the excess over $44,400

Over $47,930 but not over $52,400 $166.16 less 2.35% of

the excess over $47,930

Over $52,400 but not over $53,270 $61.11 less 2.15% of

the excess over $52,400

Over $53,270 but not over $55,001 $42.41 less 2.45% of

the excess over $53,270

Over $55,001 $0.00;

(f) six personal exemptions:

If taxable income is: The credit shall be:

Not over $31,900 $0.00

Over $31,900 but not over $39,900 $0.00 plus 1.70% of

the excess over $31,900

Over $39,900 but not over $40,560 $136.00 plus 3.20% of

the excess over $39,900

Over $40,560 but not over $45,560 $157.12 plus 0.48% of

the excess over $40,560

Over $45,560 but not over $47,900 $181.12 less 1.92% of

the excess over $45,560

Over $47,900 but not over $50,560 $136.19 less 0.42% of

the excess over $47,900

Over $50,560 but not over $54,993 $125.02 less 2.82% of

the excess over $50,560

Over $54,993 $0.00;

(g) seven personal exemptions:

If taxable income is: The credit shall be:

Not over $35,400 $0.00

Over $35,400 but not over $43,400 $0.00 plus 1.70% of

the excess over $35,400

Over $43,400 but not over $43,470 $136.00 plus 3.20% of

the excess over $43,400

Over $43,470 but not over $48,180 $138.24 plus 0.31% of

the excess over $43,470

Over $48,180 but not over $51,400 $152.84 less 2.24% of

the excess over $48,180

Over $51,400 but not over $52,880 $80.71 less 0.74% of

the excess over $51,400

Over $52,880 but not over $55,000 $69.76 less 3.29% of

the excess over $52,880

Over $55,000 $0.00; and

(h) eight or more personal exemptions:

If taxable income is: The credit shall be:

Not over $38,900 $0.00

Over $38,900 but not over $46,060 $0.00 plus 1.70% of

the excess over $38,900

Over $46,060 but not over $46,900 $121.72 less 1.36% of

the excess over $46,060

Over $46,900 but not over $50,500 $110.30 plus 0.14% of

the excess over $46,900

Over $50,500 but not over $55,005 $115.34 less 2.56% of

the excess over $50,500

Over $55,005 $0.00.

(3) For married individuals filing joint returns with:

(a) two personal exemptions:

If taxable income is: The credit shall be:

Not over $17,900 $0.00

Over $17,900 but not over $22,900 $0.00 plus 1.70% of

the excess over $17,900

Over $22,900 but not over $25,900 $85.00 plus 0.00% of

the excess over $22,900

Over $25,900 but not over $30,000 $85.00 plus 1.50% of

the excess over $25,900

Over $30,000 but not over $30,750 $146.50 plus 1.16% of

the excess over $30,000

Over $30,750 but not over $33,900 $155.20 less 0.64% of

the excess over $30,750

Over $33,900 but not over $37,420 $135.04 plus 0.86% of

the excess over $33,900

Over $37,420 but not over $41,900 $165.31 less 0.94% of

the excess over $37,420

Over $41,900 but not over $44,080 $123.20 less 0.74% of

the excess over $41,900

Over $44,080 but not over $55,005 $107.07 less 0.98% of

the excess over $44,080

Over $55,005 $0.00;

(b) three personal exemptions:

If taxable income is: The credit shall be:

Not over $21,400 $0.00

Over $21,400 but not over $28,900 $0.00 plus 1.70% of

the excess over $21,400

Over $28,900 but not over $29,400 $127.50 plus 0.00% of

the excess over $28,900

Over $29,400 but not over $30,000 $127.50 plus 1.50% of

the excess over $29,400

Over $30,000 but not over $35,310 $136.50 plus 0.99% of

the excess over $30,000

Over $35,310 but not over $37,400 $189.07 less 0.96% of

the excess over $35,310

Over $37,400 but not over $41,460 $169.01 plus 0.54% of

the excess over $37,400

Over $41,460 but not over $45,400 $190.93 less 1.41% of

the excess over $41,460

Over $45,400 but not over $47,620 $135.38 less 1.21% of

the excess over $45,400

Over $47,620 but not over $55,002 $108.51 less 1.47% of

the excess over $47,620

Over $55,002 $0.00;

If taxable income is: The credit shall be:

Not over $24,900 $0.00

Over $24,900 but not over $32,900 $0.00 plus 1.70% of

the excess over $24,900

Over $32,900 but not over $33,500 $136.00 plus 3.20% of

the excess over $32,900

Over $33,500 but not over $39,210 $155.20 plus 0.82% of

the excess over $33,500

Over $39,210 but not over $40,900 $202.02 less 1.28% of

the excess over $39,210

Over $40,900 but not over $44,930 $180.39 plus 0.22% of

the excess over $40,900

Over $44,930 but not over $48,900 $189.26 less 1.88% of

the excess over $44,930

Over $48,900 but not over $50,640 $114.62 less 1.68% of

the excess over $48,900

Over $50,640 but not over $54,997 $85.39 less 1.96% of the excess over $50,640

Over $54,997 $0.00;

(d) five personal exemptions:

If taxable income is: The credit shall be:

Not over $28,400 $0.00

Over $28,400 but not over $36,400 $0.00 plus 1.70% of

the excess over $28,400

Over $36,400 but not over $37,270 $136.00 plus 3.20% of

the excess over $36,400

Over $37,270 but not over $42,600 $163.84 plus 0.65% of

the excess over $37,270

Over $42,600 but not over $44,400 $198.49 less 1.60% of

the excess over $42,600

Over $44,400 but not over $47,930 $169.69 less 0.10% of

the excess over $44,400

Over $47,930 but not over $52,400 $166.16 less 2.35% of

the excess over $47,930

Over $52,400 but not over $53,270 $61.11 less 2.15% of

the excess over $52,400

Over $53,270 but not over $55,001 $42.41 less 2.45% of

the excess over $53,270

Over $55,001 $0.00;

(e) six personal exemptions:

If taxable income is: The credit shall be:

Not over $31,900 $0.00

Over $31,900 but not over $39,900 $0.00 plus 1.70% of

the excess over $31,900

Over $39,900 but not over $40,560 $136.00 plus 3.20% of

the excess over $39,900

Over $40,560 but not over $45,560 $157.12 plus 0.48% of

the excess over $40,560

Over $45,560 but not over $47,900 $181.12 less 1.92% of

the excess over $45,560

Over $47,900 but not over $50,560 $136.19 less 0.42% of

the excess over $47,900

Over $50,560 but not over $54,993 $125.02 less 2.82% of

the excess over $50,560

Over $54,993 $0.00;

(f) seven personal exemptions:

If taxable income is: The credit shall be:

Not over $35,400 $0.00

Over $35,400 but not over $43,400 $0.00 plus 1.70% of

the excess over $35,400

Over $43,400 but not over $43,470 $136.00 plus 3.20% of

the excess over $43,400

Over $43,470 but not over $48,180 $138.24 plus 0.31% of

the excess over $43,470

Over $48,180 but not over $51,400 $152.84 less 2.24% of

the excess over $48,180

Over $51,400 but not over $52,880 $80.71 less 0.74% of

the excess over $51,400

Over $52,880 but not over $55,000 $69.76 less 3.29% of

the excess over $52,880

Over $55,000 $0.00;

(g) eight personal exemptions:

If taxable income is: The credit shall be:

Not over $38,900 $0.00

Over $38,900 but not over $46,060 $0.00 plus 1.70% of

the excess over $38,900

Over $46,060 but not over $46,900 $121.72 less 1.36% of

the excess over $46,060

Over $46,900 but not over $50,500 $110.30 plus 0.14% of

the excess over $46,900

Over $50,500 but not over $54,900 $115.34 less 2.56% of

the excess over $50,500

Over $54,900 but not over $54,940 $2.70 less 1.06% of

the excess over $54,900

Over $54,940 but not over $55,000 $2.27 less 3.76% of

the excess over $54,940

Over $55,000 $0.00; and

(h) nine or more personal exemptions:

If taxable income is: The credit shall be:

Not over $42,400 $0.00

Over $42,400 but not over $48,370 $0.00 plus 1.70% of

the excess over $42,400

Over $48,370 but not over $50,400 $101.49 less 1.53% of

the excess over $48,370

Over $50,400 but not over $52,580 $70.43 less 0.03% of

the excess over $50,400

Over $52,580 but not over $55,003 $69.78 less 2.88% of

the excess over $52,580

Over $55,003 $0.00.

(4) For single individuals with:

(a) one personal exemption:

If taxable income is: The credit shall be:

Not over $8,950 $0.00

Over $8,950 but not over $11,450 $0.00 plus 1.70% of

the excess over $8,950

Over $11,450 but not over $14,450 $42.50 plus 0.00% of

the excess over $11,450

Over $14,450 but not over $16,950 $42.50 plus 1.50% of

the excess over $14,450

Over $16,950 but not over $19,950 $80.00 plus 0.00% of

the excess over $16,950

Over $19,950 but not over $20,000 $80.00 plus 1.50% of

the excess over $19,950

Over $20,000 but not over $22,130 $80.75 plus 1.02% of

the excess over $20,000

Over $22,130 but not over $24,950 $102.48 less 0.70% of

the excess over $22,130

Over $24,950 but not over $26,480 $82.74 less 0.50% of

the excess over $24,950

Over $26,480 but not over $36,627 $75.09 less 0.74% of

the excess over $26,480

Over $36,627 $0.00;

(b) two personal exemptions:

If taxable income is: The credit shall be:

Not over $12,450 $0.00

Over $12,450 but not over $17,450 $0.00 plus 1.70% of

the excess over $12,450

Over $17,450 but not over $17,950 $85.00 plus 0.00% of

the excess over $17,450

Over $17,950 but not over $20,000 $85.00 plus 1.50% of

the excess over $17,950

Over $20,000 but not over $22,270 $115.75 plus 0.99% of

the excess over $20,000

Over $22,270 but not over $23,450 $138.22 less 0.96% of

the excess over $22,270

Over $23,450 but not over $26,500 $126.90 plus 0.54% of

the excess over $23,450

Over $26,500 but not over $28,450 $143.37 less 1.41% of

the excess over $26,500

Over $28,450 but not over $30,350 $115.87 less 1.21% of

the excess over $28,450

Over $30,350 but not over $36,668 $92.88 less 1.47% of

the excess over $30,350

Over $36,668 $0.00;

If taxable income is: The credit shall be:

Not over $15,950 $0.00

Over $15,950 but not over $21,450 $0.00 plus 1.70% of

the excess over $15,950

Over $21,450 but not over $22,380 $93.50 plus 3.20% of

the excess over $21,450

Over $22,380 but not over $26,170 $123.26 plus 0.74% of

the excess over $22,380

Over $26,170 but not over $26,950 $151.31 less 1.44% of

the excess over $26,170

Over $26,950 but not over $29,970 $140.07 plus 0.06% of

the excess over $26,950

Over $29,970 but not over $31,950 $141.89 less 2.12% of

the excess over $29,970

Over $31,950 but not over $33,410 $99.91 less 1.92% of

the excess over $31,950

Over $33,410 but not over $36,662 $71.88 less 2.21% of

the excess over $33,410

Over $36,662 $0.00;

(d) four personal exemptions:

If taxable income is: The credit shall be:

Not over $19,450 $0.00

Over $19,450 but not over $24,950 $0.00 plus 1.70% of

the excess over $19,450

Over $24,950 but not over $25,910 $93.50 plus 3.20% of

the excess over $24,950

Over $25,910 but not over $29,340 $124.22 plus 0.48% of

the excess over $25,910

Over $29,340 but not over $30,450 $140.68 less 1.92% of

the excess over $29,340

Over $30,450 but not over $32,780 $119.37 less 0.42% of

the excess over $30,450

Over $32,780 but not over $35,450 $109.59 less 2.82% of

the excess over $32,780

Over $35,450 but not over $35,910 $34.29 less 2.62% of

the excess over $35,450

Over $35,910 but not over $36,666 $22.24 less 2.94% of

the excess over $35,910

Over $36,666 $0.00;

(e) five personal exemptions:

If taxable income is: The credit shall be:

Not over $22,950 $0.00

Over $22,950 but not over $28,450 $0.00 plus 1.70% of

the excess over $22,950

Over $28,450 but not over $28,830 $93.50 plus 3.20% of

the excess over $28,450

Over $28,830 but not over $31,970 $105.66 plus 0.23% of

the excess over $28,830

Over $31,970 but not over $33,950 $112.88 less 2.40% of

the excess over $31,970

Over $33,950 but not over $35,110 $65.36 less 0.90% of

the excess over $33,950

Over $35,110 but not over $36,666 $54.92 less 3.53% of

the excess over $35,110

Over $36,666 $0.00;

(f) six personal exemptions:

If taxable income is: The credit shall be:

Not over $26,450 $0.00

Over $26,450 but not over $31,290 $0.00 plus 1.70% of

the excess over $26,450

Over $31,290 but not over $31,950 $82.28 less 1.53% of

the excess over $31,290

Over $31,950 but not over $34,180 $72.18 less 0.03% of

the excess over $31,950

Over $34,180 but not over $36,663 $71.51 less 2.88% of

the excess over $34,180

Over $36,663 $0.00;

(g) seven personal exemptions:

If taxable income is: The credit shall be:

Not over $29,950 $0.00

Over $29,950 but not over $33,390 $0.00 plus 1.70% of

the excess over $29,950

Over $33,390 but not over $35,450 $58.48 less 1.79% of

the excess over $33,390

Over $35,450 but not over $36,070 $21.61 less 0.29% of

the excess over $35,450

Over $36,070 but not over $36,660 $19.81 less 3.36% of

the excess over $36,070

Over $36,660 $0.00; and

(h) eight or more personal exemptions:

If taxable income is: The credit shall be:

Not over $33,450 $0.00

Over $33,450 but not over $35,200 $0.00 plus 1.70% of

the excess over $33,450

Over $35,200 but not over $36,658 $29.75 less 2.04% of

the excess over $35,200

Over $36,658 $0.00.

(5) For heads of household with:

(a) one personal exemption:

If taxable income is: The credit shall be:

Not over $11,500 $0.00

Over $11,500 but not over $14,000 $0.00 plus 1.70% of

the excess over $11,500

Over $14,000 but not over $19,500 $42.50 plus 0.00% of

the excess over $14,000

Over $19,500 but not over $22,000 $42.50 plus 1.50% of

the excess over $19,500

Over $22,000 but not over $27,500 $80.00 plus 0.00% of

the excess over $22,000

Over $27,500 but not over $30,000 $80.00 plus 1.50% of

the excess over $27,500

Over $30,000 but not over $35,500 $117.50 less 0.47% of

the excess over $30,000

Over $35,500 but not over $37,270 $91.65 less 0.27% of

the excess over $35,500

Over $37,270 but not over $54,999 $86.87 less 0.49% of

the excess over $37,270

Over $54,999 $0.00;

(b) two personal exemptions:

If taxable income is: The credit shall be:

Not over $15,000 $0.00

Over $15,000 but not over $20,000 $0.00 plus 1.70% of

the excess over $15,000

Over $20,000 but not over $23,000 $85.00 plus 0.00% of

the excess over $20,000

Over $23,000 but not over $28,000 $85.00 plus 1.50% of

the excess over $23,000

Over $28,000 but not over $30,000 $160.00 plus 0.00% of

the excess over $28,000

Over $30,000 but not over $31,000 $160.00 less 0.64% of

the excess over $30,000

Over $31,000 but not over $35,000 $153.60 plus 0.86% of

the excess over $31,000

Over $35,000 but not over $39,000 $188.00 less 0.94% of

the excess over $35,000

Over $39,000 but not over $41,670 $150.40 less 0.74% of

the excess over $39,000

Over $41,670 but not over $55,001 $130.64 less 0.98% of

the excess over $41,670;

Over $55,001 $0.00;

If taxable income is: The credit shall be:

Not over $18,500 $0.00

Over $18,500 but not over $26,000 $0.00 plus 1.70% of

the excess over $18,500

Over $26,000 but not over $26,500 $127.50 plus 0.00% of

the excess over $26,000

Over $26,500 but not over $30,000 $127.50 plus 1.50% of

the excess over $26,500

Over $30,000 but not over $33,080 $180.00 plus 0.99% of

the excess over $30,000

Over $33,080 but not over $34,500 $210.49 less 0.96% of

the excess over $33,080

Over $34,500 but not over $39,230 $196.86 plus 0.54% of

the excess over $34,500

Over $39,230 but not over $42,500 $222.40 less 1.41% of

the excess over $39,230

Over $42,500 but not over $45,380 $176.30 less 1.21% of

the excess over $42,500

Over $45,380 but not over $55,002 $141.45 less 1.47% of

the excess over $45,380

Over $55,002 $0.00;

(d) four personal exemptions:

If taxable income is: The credit shall be:

Not over $22,000 $0.00

Over $22,000 but not over $30,000 $0.00 plus 1.70% of

the excess over $22,000

Over $30,000 but not over $31,430 $136.00 plus 3.20% of

the excess over $30,000

Over $31,430 but not over $37,140 $181.76 plus 0.82% of

the excess over $31,430

Over $37,140 but not over $38,000 $228.58 less 1.28% of

the excess over $37,140

Over $38,000 but not over $42,860 $217.57 plus 0.22% of

the excess over $38,000

Over $42,860 but not over $46,000 $228.27 less 1.88% of

the excess over $42,860

Over $46,000 but not over $48,570 $169.23 less 1.68% of

the excess over $46,000

Over $48,570 but not over $55,002 $126.06 less 1.96% of

the excess over $48,570

Over $55,002 $0.00;

(e) five personal exemptions:

If taxable income is: The credit shall be:

Not over $25,500 $0.00

Over $25,500 but not over $33,500 $0.00 plus 1.70% of

the excess over $25,500

Over $33,500 but not over $35,330 $136.00 plus 3.20% of

the excess over $33,500

Over $35,330 but not over $40,670 $194.56 plus 0.65% of

the excess over $35,330

Over $40,670 but not over $41,500 $229.27 less 1.60% of

the excess over $40,670

Over $41,500 but not over $46,000 $215.99 less 0.10% of

the excess over $41,500

Over $46,000 but not over $49,500 $211.49 less 2.35% of

the excess over $46,000

Over $49,500 but not over $51,330 $129.24 less 2.15% of

the excess over $49,500

Over $51,330 but not over $54,999 $89.90 less 2.45% of

the excess over $51,330

Over $54,999 $0.00;

(f) six personal exemptions:

If taxable income is: The credit shall be:

Not over $29,000 $0.00

Over $29,000 but not over $37,000 $0.00 plus 1.70% of

the excess over $29,000

Over $37,000 but not over $38,750 $136.00 plus 3.20% of

the excess over $37,000

Over $38,750 but not over $43,750 $192.00 plus 0.48% of

the excess over $38,750

Over $43,750 but not over $45,000 $216.00 less 1.92% of

the excess over $43,750

Over $45,000 but not over $48,750 $192.00 less 0.42% of

the excess over $45,000

Over $48,750 but not over $53,000 $176.25 less 2.82% of

the excess over $48,750

Over $53,000 but not over $53,750 $56.40 less 2.62% of

the excess over $53,000

Over $53,750 but not over $55,000 $36.75 less 2.94% of

the excess over $53,750

Over $55,000 $0.00;

(g) seven personal exemptions:

If taxable income is: The credit shall be:

Not over $32,500 $0.00

Over $32,500 but not over $40,500 $0.00 plus 1.70% of

the excess over $32,500

Over $40,500 but not over $41,760 $136.00 plus 3.20% of

the excess over $40,500

Over $41,760 but not over $46,470 $176.32 plus 0.31% of

the excess over $41,760

Over $46,470 but not over $48,500 $190.92 less 2.24% of

the excess over $46,470

Over $48,500 but not over $51,180 $145.45 less 0.74% of

the excess over $48,500

Over $51,180 but not over $54,998 $125.62 less 3.29% of

the excess over $51,180

Over $54,998 $0.00; and

(h) eight or more personal exemptions:

If taxable income is: The credit shall be:

Not over $36,000 $0.00

Over $36,000 but not over $44,000 $0.00 plus 1.70% of

the excess over $36,000

Over $44,000 but not over $44,440 $136.00 plus 3.20% of

the excess over $44,000

Over $44,440 but not over $48,890 $150.08 plus 0.14% of

the excess over $44,440

Over $48,890 but not over $52,000 $156.31 less 2.56% of

the excess over $48,890

Over $52,000 but not over $53,330 $76.69 less 1.06% of

the excess over $52,000

Over $53,330 but not over $54,995 $62.60 less 3.76% of

the excess over $53,330

Over $54,995 $0.00.

(6) For 2010 and subsequent years, the taxable income amounts in the tables in Paragraphs (1) through (5) of this subsection shall be indexed for inflation under the provisions of Section 7-1-83 NMSA 1978 using 2009 as the base year, and the credit amounts at each taxable income level in each table recomputed using the percentages in the table. E. A taxpayer who is a full-year resident of New Mexico, who files an individual New Mexico income tax return and who is not a trust, estate or dependent of another taxpayer may claim a credit for a portion of state and local taxes to which the resident has been subject during the taxable year for which the return is filed in an amount determined from the table in Paragraph (1) of this subsection. The tax credit may be claimed even though the resident has no income taxable under the Income Tax Act. A husband and wife 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 tax credit that would have been allowed on a joint return:

(1) full-year resident state and local tax credit table:

If the modified And the total number of personal

gross income is: exemptions is:

1 2 3 4 5 6 or

The credit shall be:

Not over $4,500 $135 $195 $250 $310 $355 $450

But not

Over over

$4,500 $5,000 125 190 240 305 355 450

$5,000 $5,500 115 175 230 295 355 430

$5,500 $6,000 105 155 210 260 315 410

$6,000 $7,000 90 130 170 220 275 370

$7,000 $8,000 80 115 145 180 225 295

$8,000 $9,000 70 105 135 170 195 240

$9,000 $10,000 65 95 115 145 175 205

$10,000 $11,000 60 80 100 130 155 185

$11,000 $12,000 55 70 90 110 135 160

$12,000 $13,000 50 65 85 100 115 140

$13,000 $14,000 50 65 85 100 115 140

$14,000 $15,000 45 60 75 90 105 120

$15,000 $16,000 40 55 70 85 95 110

$16,000 $17,000 35 50 65 80 85 105

$17,000 $18,000 30 45 60 70 80 95

$18,000 $19,000 25 35 50 60 70 80

$19,000 $20,000 20 30 40 50 60 65

$20,000 $21,000 15 25 30 40 50 55

$21,000 $22,000 10 20 25 35 40 45

Over $22,000 0 0 0 0 0 0;

(2) as used in this subsection, "full-year resident" includes a first-year resident, and if either spouse on a married-filing-joint return is a full-year resident, both spouses and all of their dependents are full-year residents;

(3) for purposes of this subsection, the number of personal exemptions shall be increased by two for each individual included in the return who is sixty-five years of age or older, increased by one for each individual included in the return who, for federal income tax purposes, is blind and reduced by one for an individual included in the return who was an inmate of a public institution for more than six months during the taxable year for which the return is filed; and

(4) for 2010 and subsequent years, the taxable income and credit amounts in the table shall be indexed for inflation under the provisions of Section 7-1-83 NMSA 1978 using 2009 as the base year.

F. The credits determined pursuant to Subsections B, C and D of this section shall be claimed against the tax imposed pursuant to Section 7-2-3 NMSA 1978 before any other credit or tax rebate authorized under the Income Tax Act.

G. If the credit provided in this section exceeds the tax imposed pursuant to Section 7-2-3 NMSA 1978, an amount shall be refunded to the taxpayer that equals the lesser of:

(1) the excess; or

(2) the portion of the credit determined pursuant to Subsection E of this section."

Section 16. Section 7-2-11 NMSA 1978 (being Laws 1965, Chapter 202, Section 9, as amended) is amended to read:

"7-2-11. TAX CREDIT--INCOME ALLOCATION AND APPORTIONMENT.--

A. [Net] Taxable income of any individual having income that is taxable both within and without [this state] New Mexico shall be apportioned and allocated as follows:

(1) during the first taxable year in which an individual incurs tax liability as a resident, only income earned on or after the date the individual became a resident and, in addition, income earned in New Mexico while a nonresident of New Mexico shall be allocated to New Mexico;

(2) except as provided otherwise in Paragraph (1) of this subsection, income other than compensation or gambling winnings shall be allocated and apportioned as provided in the Uniform Division of Income for Tax Purposes Act, but if the income is not allocated or apportioned by that act, then it may be allocated or apportioned in accordance with instructions, rulings or regulations of the secretary;

(3) except as provided otherwise in Paragraph (1) of this subsection, compensation and gambling winnings of a resident taxpayer shall be allocated to [this state] New Mexico;

(4) compensation of a nonresident taxpayer shall be allocated to [this state] New Mexico to the extent that [such] the compensation is for activities, labor or personal services within [this state] New Mexico; provided:

(a) if the activities, labor or services are performed in [this state] New Mexico for fifteen or fewer days during the taxpayer's taxable year, the compensation may be allocated to the taxpayer's state of residence; and

(b) if the compensation is for activities, labor or services performed for a business in the manufacturing industry in New Mexico that is located within twenty miles of an international border, that has a minimum of five full-time employees who are New Mexico residents, is not receiving development training funds under Section 21-19-7 NMSA 1978 and that meets the qualifications of one of Items 1) through 4) of this subparagraph, the compensation may be allocated to the taxpayer's state of residence: 1) the business had no payroll in New Mexico during the previous calendar year; 2) the business had a payroll in New Mexico for less than the entire previous calendar year, and the first payroll of the new calendar year includes payments to New Mexico residents exceeding the highest monthly payroll for such residents in the previous calendar year; 3) the business had a payroll in New Mexico for the entire previous calendar year, and the first payroll of the new calendar year includes payments to New Mexico residents exceeding by at least ten percent both the payroll for all employees in January 2001 and the payroll for New Mexico residents twelve months prior to the commencement of the new calendar year; or 4) the business had a payroll in New Mexico for the entire previous calendar year, but had no payroll in New Mexico within one year prior to January 1, 2001, and the first payroll of the new calendar year includes payments to New Mexico residents exceeding by at least ten percent the payroll for such residents twelve months earlier;

(5) gambling winnings of a nonresident shall be allocated to [this state] New Mexico if the gambling winnings arose from a source within [this state] New Mexico; and

(6) other deductions and exemptions allowable in computing [net] taxable income and not specifically allocated in the Uniform Division of Income for Tax Purposes Act shall be equitably allocated or apportioned in accordance with instructions, rulings or regulations of the secretary.

B. For the purposes of this section, "non-New Mexico percentage" means the [percentage] quotient determined by dividing the difference between the taxpayer's [net] taxable income and the sum of the amounts allocated or apportioned to New Mexico by that [net] taxable income; provided that, if the quotient is greater than one, it shall be one and if the quotient is less than zero, it shall be zero.

C. A taxpayer may claim a credit in an amount equal to the non-New Mexico percentage multiplied by the difference between the amount of tax determined to be due under Section 7-2-7 or 7-2-7.1 NMSA 1978 [multiplied by the non-New Mexico percentage] and the credit determined pursuant to Subsections B, C and D of Section 7-2-7.4 NMSA 1978."

Section 17. Section 7-2-12 NMSA 1978 (being Laws 1965, Chapter 202, Section 10, as amended) is amended to read:

"7-2-12. TAXPAYER RETURNS--FILING STATUS--PAYMENT OF TAX.--

A. Every resident of [this state] New Mexico and every individual deriving income from any business transaction, property or employment within [this state] New Mexico and not exempt from tax under the Income Tax Act who is required by the laws of the United States to file a federal income tax return shall file a complete tax return with the department in form and content as prescribed by the secretary. [Except as provided in Subsection B of this section]

B. The taxpayer shall use the same filing status on the New Mexico income tax return as the taxpayer used for federal income tax purposes or the same filing status as would have been used for federal income tax purposes if the taxpayer had been required to file a federal income tax return.

C. The return required and the tax imposed on individuals under the Income Tax Act are due and payment is required on or before the fifteenth day of the fourth month following the end of the taxable year; [B.] provided that when the department approves electronic media for use by a taxpayer whose taxable year is a calendar year, the taxpayer who uses electronic media for both filing and payment must submit the required return and the tax imposed on individuals under the Income Tax Act on or before the thirtieth day of the fourth month following the end of the taxable year."

Section 18. Section 7-2-12.1 NMSA 1978 (being Laws 1990, Chapter 23, Section 1) is amended to read:

"7-2-12.1. LIMITATION ON CLAIMING OF CREDITS AND TAX REBATES.--

A. Except as provided otherwise in this section, a credit or tax rebate provided in the Income Tax Act that is claimed shall be disallowed if the claim for the credit or tax rebate was first made after the end of the third calendar year following the calendar year in which the return upon which the credit or tax rebate was first claimable was initially due.

B. Subsection A of this section does not apply to:

(1) the credit authorized by Section 7-2-7.4 NMSA 1978 for exemptions, deductions, rate brackets and state and local taxes;

[(1)] (2) the credit authorized by Section 7-2-13 NMSA 1978 for income taxes paid another state; or

[(2)] (3) the credit authorized by Section 7-2-19 NMSA 1978 for income taxes paid another state."

Section 19. Section 7-2-32 NMSA 1978 (being Laws 1997, Chapter 259, Section 8) is amended to read:

"7-2-32. DEDUCTION--PAYMENTS INTO EDUCATION TRUST FUND.--In determining taxable income, a taxpayer may claim a deduction [from net income] in an amount equal to the payments made by the taxpayer into the education trust fund pursuant to a college investment agreement or prepaid tuition contract under the Education Trust Act in the taxable year for which the deduction is being claimed. The amount of payments made on behalf of any one beneficiary that may be deducted shall not exceed in the aggregate the cost of attendance at the applicable institution of higher education, as determined by the education trust board. A husband and wife who file separate returns for the taxable year in which they could have filed a joint return may each claim only one-half of the deduction that would have been allowed on the joint return. [Individuals having income both within and without this state shall apportion this deduction in accordance with regulations of the secretary.]"

Section 20. Section 7-2-34 NMSA 1978 (being Laws 1999, Chapter 205, Section 1, as amended) is amended to read:

"7-2-34. DEDUCTION--NET CAPITAL GAIN INCOME.--

A. Except as provided in Subsection C of this section, in determining taxable income a taxpayer may claim a deduction [from net income] in an amount equal to the greater of:

(1) the taxpayer's net capital gain income for the taxable year for which the deduction is being claimed, but not to exceed one thousand dollars ($1,000); or

(2) [the following percentage] fifty percent of the taxpayer's net capital gain income for the taxable year for which the deduction is being claimed

[(a) for a taxable year beginning in 2003, ten percent;

(b) for a taxable year beginning in 2004, twenty percent;

(d) for a taxable year beginning in 2006, forty percent; and

(e) for taxable years beginning on or after January 1, 2007, fifty percent].

B. A husband and wife 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 deduction provided by this section that would have been allowed on the joint return.

C. A taxpayer may not claim the deduction provided in Subsection A of this section if the taxpayer has claimed the credit provided in Section 7-2D-8.1 NMSA 1978.

D. As used in this section, "net capital gain" means "net capital gain" as defined in Section 1222 (11) of the Internal Revenue Code."

Section 21. Section 7-2-35 NMSA 1978 (being Laws 2000 (2nd S.S.), Chapter 7, Section 1) is amended to read:

"7-2-35. DEDUCTION--UNREIMBURSED OR UNCOMPENSATED MEDICAL CARE EXPENSES.--

A. In determining taxable income, a taxpayer may claim a deduction [from net income] in an amount determined pursuant to Subsection B of this section for medical care expenses paid during the taxable year for medical care of the taxpayer, the taxpayer's spouse or a dependent if the expenses are not reimbursed or compensated for by insurance or otherwise and have not been included in the taxpayer's itemized deductions, as defined in Section 63 of the Internal Revenue Code for the taxable year.

B. The deduction provided in Subsection A of this section may be claimed in an amount equal to the following percentage of medical care expenses paid during the taxable year based on the taxpayer's filing status and adjusted gross income as follows:

(1) for surviving spouses and married individuals filing joint returns:

If adjusted gross income is: The following percent of medical care expenses paid may be deducted:

Not over $30,000 25 percent

More than $30,000 but not more than $70,000 15 percent

Over $70,000 10 percent;

(2) for single individuals and married individuals filing separate returns:

If adjusted gross income is: The following percent of medical care expenses paid may be deducted:

Not over $15,000 25 percent

More than $15,000 but not more than $35,000 15 percent

Over $35,000 10 percent; and

(3) for heads of household:

If adjusted gross income is: The following percent of medical care expenses paid may be deducted:

Not over $20,000 25 percent

More than $20,000 but not more than $50,000 15 percent

Over $50,000 10 percent.

C. As used in this section:

[(1) "dependent" means dependent as defined in Section 152 of the Internal Revenue Code;

(2)] (1) "health care facility" means a hospital, outpatient facility, diagnostic and treatment center, rehabilitation center, [free-standing] freestanding hospice or other similar facility at which medical care is provided;

[(3)] (2) "medical care" means the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body;

[(4)] (3) "medical care expenses" means amounts paid for:

(a) the diagnosis, cure, mitigation, treatment or prevention of disease or for the purpose of affecting any structure or function of the body, excluding cosmetic surgery, if provided by a physician or in a health care facility;

(b) prescribed drugs or insulin;

(d) insurance covering medical care, including amounts paid as premiums under Part B of Title [XVIII] 18 of the Social Security Act or for a qualified long-term care insurance contract defined in Section 7702B(b) of the Internal Revenue Code, if the insurance or other amount is paid from income included in the taxpayer's adjusted gross income for the taxable year;

(e) nursing services, regardless of where the services are rendered, if provided by a practical nurse or a professional nurse licensed to practice in [the state] New Mexico pursuant to the Nursing Practice Act;

(f) specialized treatment or the use of special therapeutic devices if the treatment or device is prescribed by a physician and the patient can show that the expense was incurred primarily for the prevention or alleviation of a physical or mental defect or illness; and

(g) care in an institution other than a hospital, such as a sanitarium or rest home, if the principal reason for the presence of the person in the institution is to receive the medical care available; provided that if the meals and lodging are furnished as a necessary part of such care, the cost of the meals and lodging are "medical care expenses";

[(5)] (4) "physician" means a medical doctor, osteopathic physician, dentist, podiatrist, chiropractic physician or psychologist licensed or certified to practice in New Mexico; and

[(6)] (5) "prescribed drug" means a drug or biological that requires a prescription of a physician for its use by an individual."

Section 22. Section 7-2-36 NMSA 1978 (being Laws 2005, Chapter 113, Section 1) is amended to read:

"7-2-36. DEDUCTION--EXPENSES RELATED TO ORGAN DONATION.--

A. In determining taxable income, a taxpayer may claim a deduction [from net income] in an amount not to exceed ten thousand dollars ($10,000) of organ donation-related expenses, including lost wages, lodging expenses and travel expenses, incurred during the taxable year by the taxpayer or the taxpayer's dependent as a result of the taxpayer's or dependent's donation of a human organ to another person for transfer of that human organ to the body of another person.

C. [For the purposes of] As used in this section,

[(1) "dependent" means "dependent" as defined by Section 152 of the Internal Revenue Code, as that section may be amended or renumbered; and

(2)] "human organ" means all or part of a heart, liver, pancreas, kidney, intestine, lung or bone marrow."

Section 23. A new section of the Income Tax Act, Section 7-2-37 NMSA 1978, is enacted to read:

"7-2-37. [NEW MATERIAL] DEDUCTION--FEDERAL ITEMIZED OR STANDARD DEDUCTION.--In determining taxable income:

A. a taxpayer other than an estate or trust who is not a dependent of another taxpayer for the taxable year may claim a deduction in an amount equal to the excess of the standard or itemized deductions allowed the taxpayer for the taxpayer's taxable year under Section 63 of the Internal Revenue Code over an amount equal to the basic standard deduction allowed the taxpayer for the taxpayer's taxable year under Section 63 of the Internal Revenue Code provided that the excess shall not be less than zero; and

B. a taxpayer other than an estate or trust who is a dependent of another taxpayer for the taxable year may claim a deduction in an amount equal to the amount allowed the taxpayer for the taxpayer's taxable year for a standard or itemized deductions under Section 63 of the Internal Revenue Code."

Section 24. REPEAL.--Sections 7-2-5.8 and 7-2-14 NMSA 1978 (being Laws 2005, Chapter 104, Section 5 and Laws 1972, Chapter 20, Section 2, as amended) are repealed.

Section 25. APPLICABILITY.--The provisions of this act are applicable to taxable years beginning on or after January 1, 2008.

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