SENATE BILL 344

53rd legislature - STATE OF NEW MEXICO - first session, 2017

INTRODUCED BY

Bill Tallman

AN ACT

RELATING TO TAXATION; INCREASING THE TAX IMPOSED BY THE INCOME TAX ACT FOR CERTAIN INCOME LEVELS; LIMITING THE CAPITAL GAINS DEDUCTION; DISTRIBUTING A PORTION OF THE TAX IMPOSED BY THE INCOME TAX ACT TO PRE-KINDERGARTEN PROGRAMS; REPEALING AN OUTDATED VERSION OF SECTION 7-2-7 NMSA 1978 (BEING LAWS 2005 (1ST S.S.), CHAPTER 3, SECTION 2); MAKING AN APPROPRIATION.

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

     SECTION 1. A new section of the Tax Administration Act is

enacted to read:

     "[NEW MATERIAL] DISTRIBUTION--INCOME TAX--PUBLIC PRE-KINDERGARTEN FUND AND CHILDREN, YOUTH AND FAMILIES PRE-KINDERGARTEN FUND.--

          A. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the public pre-kindergarten fund in an

amount equal to five and two-tenths percent of the net receipts attributable to the tax imposed by Section 7-2-3 NMSA 1978.

          B. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to the children, youth and families pre-kindergarten fund in an amount equal to five and two-tenths percent of the net receipts attributable to the tax imposed by Section 7-2-3 NMSA 1978."

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

     "7-2-7. INDIVIDUAL INCOME TAX RATES.--The tax imposed by Section 7-2-3 NMSA 1978 shall be at the following rates for any 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 but not over $125,000    $384 plus 4.9% of excess over $12,000

Over $125,000                         $5,921 plus 8.2% of excess over $125,000.

          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 $24,000     $392 plus 4.7% of excess over $16,000

Over $24,000 but not over $250,000    $768 plus 4.9% of excess over $24,000

Over $250,000                         $11,842 plus 8.2% of excess over $250,000.

          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 $16,000     $269.50 plus 4.7% of excess over $11,000

Over $16,000 but not over 

$166,666.67                           $504.50 plus 4.9% of excess over $16,000

Over $166,666.67                      $7,887.17 plus 8.2% of excess over $166,666.67.

          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 3. 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, 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 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;

                     (c) for a taxable year beginning in 2005, thirty 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] 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 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 4. REPEAL.--That version of Section 7-2-7 NMSA 1978 (being Laws 2005 (1st S.S.), Chapter 3, Section 2) is repealed.

     SECTION 5. APPLICABILITY.--The provisions of Sections 2 and 3 of this act apply to taxable years beginning on or after January 1, 2018.

     SECTION 6. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2018.

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