HOUSE TAXATION AND REVENUE COMMITTEE SUBSTITUTE FOR
HOUSE BILL 547
56th legislature - STATE OF NEW MEXICO - first session, 2023
AN ACT
RELATING TO THE PUBLIC PEACE, HEALTH, SAFETY AND WELFARE; AMENDING INCOME TAX BRACKETS PURSUANT TO THE INCOME TAX ACT; PROVIDING FOR THE INDEXING OF MODIFIED GROSS INCOME FOR PURPOSES OF DETERMINING THE AMOUNT OF THE LOW-INCOME COMPREHENSIVE TAX REBATE; EXTENDING THE SUNSET DATE FOR AN INCOME TAX EXEMPTION FOR ARMED FORCES RETIREMENT PAY; AMENDING PROVISIONS OF THE RURAL HEALTH CARE PRACTITIONER TAX CREDIT; INCREASING AND INDEXING THE AMOUNT OF THE CHILD INCOME TAX CREDIT FOR CERTAIN TAXPAYERS; LIMITING THE CAPITAL GAINS DEDUCTION FROM NET INCOME; PROVIDING ADDITIONAL 2021 INCOME TAX REBATES; CREATING THE ELECTRIC VEHICLE INCOME TAX CREDIT; CREATING THE ELECTRIC VEHICLE CHARGING UNIT INCOME TAX CREDIT; CREATING THE ENERGY STORAGE SYSTEM INCOME TAX CREDIT; CREATING A FLAT CORPORATE INCOME TAX RATE; REQUIRING ALL BUSINESS INCOME TO BE APPORTIONED BY THE SINGLE SALES FACTOR; PROVIDING A TEMPORARY EXCEPTION TO THE NEW APPORTIONMENT REQUIREMENTS; REDUCING THE RATES OF THE GROSS RECEIPTS TAX AND THE COMPENSATING TAX; CREATING GROSS RECEIPTS TAX DEDUCTIONS FOR THE SALE OF CHILD CARE ASSISTANCE THROUGH A LICENSED CHILD CARE ASSISTANCE PROGRAM AND PRE-KINDERGARTEN SERVICES BY FOR-PROFIT PRE-KINDERGARTEN PROVIDERS; CREATING A GROSS RECEIPTS TAX DEDUCTION FOR ENVIRONMENTAL MODIFICATION SERVICES MADE TO THE HOMES OF MEDICAID RECIPIENTS; AMENDING THE INDUSTRIAL REVENUE BOND ACT AND THE COUNTY INDUSTRIAL REVENUE BOND ACT TO INCLUDE CERTAIN ELECTRIC ENERGY STORAGE FACILITIES AS ELIGIBLE PROJECTS; REQUIRING MUNICIPALITIES AND COUNTIES THAT ACQUIRE ENERGY STORAGE FACILITY PROJECTS TO PROVIDE PAYMENT-IN-LIEU-OF TAXES PAYMENTS TO SCHOOL DISTRICTS; AMENDING DISTRIBUTIONS OF THE MOTOR VEHICLE EXCISE TAX; INCREASING THE LIQUOR EXCISE TAX RATE ON CERTAIN ALCOHOLIC BEVERAGES; DISTRIBUTING A PORTION OF THE REVENUE FROM THE LIQUOR EXCISE TAX TO A NEW ALCOHOL HARMS ALLEVIATION FUND; INCREASING THE TOBACCO PRODUCTS TAX ON CIGARS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 3-32-1 NMSA 1978 (being Laws 1965, Chapter 300, Section 14-31-1, as amended) is amended to read:
"3-32-1. INDUSTRIAL REVENUE BOND ACT--DEFINITIONS.-- Wherever used in the Industrial Revenue Bond Act unless a different meaning clearly appears in the context, the following terms whether used in the singular or plural shall be given the following respective interpretations:
A. "municipality" means a city, town or village in New Mexico;
B. "project" means any land and building or other improvements thereon, the acquisition by or for a New Mexico corporation of the assets or stock of an existing business or corporation located outside the state to be relocated within or near the municipality in the state and all real and personal properties deemed necessary in connection therewith, whether or not now in existence, which shall be suitable for use by the following or by any combination of two or more thereof:
(1) an industry for the manufacturing, processing or assembling of agricultural or manufactured products;
(2) a commercial enterprise in storing, warehousing, distributing or selling products of agriculture, mining or industry but does not include a facility designed for the sale of goods or commodities at retail or distribution to the public of electricity, gas, water or telephone or other services commonly classified as public utilities;
(3) a business in which all or part of the activities of the business involve the supplying of services to the general public or to governmental agencies or to a specific industry or customer but does not include an establishment primarily engaged in the sale of goods or commodities at retail;
(4) a water distribution or irrigation system, including without limitation, pumps, distribution lines, transmission lines, towers, dams and similar facilities and equipment, designed to provide water to a vineyard or winery;
(5) an electric generation or transmission facility, other than one for which both location approval and a certificate of convenience and necessity are required prior to commencing construction or operation of the facility, pursuant to the Public Utility Act; [and]
(6) an energy storage facility, which is a facility that uses mechanical, chemical, thermal, kinetic or other processes to store energy from a zero carbon emission resource for release at a later time; and
[(6)] (7) a 501(c)(3) corporation;
C. "governing body" means the board or body in which the legislative powers of the municipality are vested;
D. "property" means any land, improvements thereon, buildings and any improvements thereto, machinery and equipment of any and all kinds necessary to the project, operating capital and any other personal properties deemed necessary in connection with the project;
E. "mortgage" means a mortgage or a mortgage and deed of trust or the pledge and hypothecation of any assets as collateral security;
F. "health care service" means the diagnosis or treatment of sick or injured persons or medical research and includes the ownership, operation, maintenance, leasing and disposition of health care facilities such as hospitals, clinics, laboratories, x-ray centers and pharmacies and, for any small municipality only, office facilities for physicians;
G. "refinance a hospital or 501(c)(3) corporation project" means the issuance of bonds by a municipality and the use of all or substantially all of the proceeds to liquidate any obligations previously incurred to finance or aid in financing a project of a nonprofit corporation engaged in health care services, including nursing homes, or of a 501(c)(3) corporation, which would constitute a project under the Industrial Revenue Bond Act had it been originally undertaken and financed by a municipality pursuant to the Industrial Revenue Bond Act; and
H. "501(c)(3) corporation" means a corporation that demonstrates to the taxation and revenue department that it has been granted exemption from the federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended or renumbered."
SECTION 2. Section 3-32-6 NMSA 1978 (being Laws 1965, Chapter 300, Section 14-31-3, as amended) is amended to read:
"3-32-6. ADDITIONAL POWERS CONFERRED ON MUNICIPALITIES.--In addition to any other powers that it may now have, a municipality shall have the following powers:
A. to acquire, whether by construction, purchase, gift or lease, one or more projects that shall be located within this state and may be located within or without the municipality or partially within or partially without the municipality, but which shall not be located more than fifteen miles outside of the corporate limits of the municipality; provided that:
(1) urban transit buses qualifying as a project pursuant to Subsection B of Section 3-32-3 NMSA 1978 need not be continuously located within this state, but the commercial enterprise using the urban transit buses for leasing shall meet the location requirement of this subsection; and
(2) a municipality shall not acquire any electricity generation, [or] transmission or energy storage facility project unless the school districts within the municipality in which the project is located receive annual in-lieu tax payments; provided that the annual in-lieu tax payments required by this paragraph shall be:
(a) payable to the school districts for the period the municipality owns and leases the project;
(b) in an aggregate amount equal to the amount received by the municipality multiplied by the percentage determined by dividing the average of the operating, capital improvement and bond mills imposed by the school districts in the municipality and state debt service mills as of the date of issuance of the bonds by the average of the mills imposed by all entities levying taxes on property in the municipality as of such date;
(c) shared among the school districts located within the municipality equally, if there is more than one school district in such municipality; and
(d) not be less than the amount due to the school districts in the tax year immediately preceding the issuance of the bonds from the property included in a project, had such project not been created;
B. to sell or lease or otherwise dispose of any or all of its projects upon such terms and conditions as the governing body may deem advisable and as shall not conflict with the provisions of the Industrial Revenue Bond Act;
C. to issue revenue bonds for the purpose of defraying the cost of acquiring by construction and purchase, or either, any project and to secure the payment of such bonds, all as provided in the Industrial Revenue Bond Act. No municipality shall have the power to operate any project as a business or in any manner except as lessor;
D. to refinance one or more hospital or 501(c)(3) corporation projects and to acquire any such hospital or 501(c)(3) corporation project whether by construction, purchase, gift or lease, which hospital or 501(c)(3) corporation project shall be located within this state and may be located within or without the municipality or partially within or partially without the municipality, but which shall not be located more than fifteen miles outside of the corporate limits of the municipality, and to issue revenue bonds to refinance and acquire a hospital or 501(c)(3) corporation project and to secure the payment of such bonds, all as provided in the Industrial Revenue Bond Act. A municipality shall not have the power to operate a hospital or 501(c)(3) corporation project as a business or in any manner except as lessor; and
E. to refinance one or more projects of any private institution of higher education and to acquire any such project, whether by construction, purchase, gift or lease; provided that the project shall be located within this state and may be located within or without the municipality or partially within or partially without the municipality, but the project shall not be located more than fifteen miles outside of the corporate limits of the municipality, and to issue revenue bonds to refinance and acquire any project of any private institution of higher education and to secure the payment of such bonds. A municipality shall not have the power to operate a project of a private institution of higher education as a business or in any manner except as lessor."
SECTION 3. Section 4-59-2 NMSA 1978 (being Laws 1975, Chapter 286, Section 2, as amended) is amended to read:
"4-59-2. DEFINITIONS.--As used in the County Industrial Revenue Bond Act, unless the context clearly indicates otherwise:
A. "commission" means the governing body of a county;
B. "county" means a county organized or incorporated in New Mexico;
C. "501(c)(3) corporation" means a corporation that demonstrates to the taxation and revenue department that it has been granted exemption from the federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended or renumbered;
D. "health care service" means the diagnosis or treatment of sick or injured persons or medical research and includes the ownership, operation, maintenance, leasing and disposition of health care facilities, such as hospitals, clinics, laboratories, x-ray centers and pharmacies;
E. "mortgage" means a mortgage or a mortgage and deed of trust or the pledge and hypothecation of any assets as collateral security;
F. "project" means any land and building or other improvements thereon, the acquisition by or for a New Mexico corporation of the assets or stock of an existing business or corporation located outside the state to be relocated within a county but, except as provided in Paragraph (1) of Subsection A of Section 4-59-4 NMSA 1978, not within the boundaries of any incorporated municipality in the state, and all real and personal properties deemed necessary in connection therewith, whether or not now in existence, that shall be suitable for use by the following or by any combination of two or more thereof:
(1) an industry for the manufacturing, processing or assembling of agricultural or manufactured products;
(2) a commercial enterprise that has received a permit from the energy, minerals and natural resources department for a mine that has not been in operation prior to the issuance of bonds for the project for which the enterprise will be involved;
(3) a commercial enterprise that has received any necessary state permit for a refinery, treatment plant or processing plant of energy products that was not in operation prior to the issuance of bonds for the project for which the enterprise will be involved;
(4) a commercial enterprise in storing, warehousing, distributing or selling products of agriculture, mining or industry, but does not include a facility designed for the sale or distribution to the public of electricity, gas, telephone or other services commonly classified as public utilities, except for:
(a) water utilities; [and]
(b) [any] an electric generation or transmission facility, other than one for which both location approval and a certificate of convenience and necessity are required prior to commencing construction or operation of the facility, pursuant to the Public Utility Act; and
(c) an energy storage facility, which is a facility that uses mechanical, chemical, thermal, kinetic or other processes to store energy from a zero carbon emission resource for release at a later time;
(5) a business in which all or part of the activities of the business involve the supplying of services to the general public or to governmental agencies or to a specific industry or customer;
(6) a nonprofit corporation engaged in health care services;
(7) a mass transit or other transportation activity involving the movement of passengers, an industrial park, an office headquarters and a research facility;
(8) a water distribution or irrigation system, including without limitation, pumps, distribution lines, transmission lines, towers, dams and similar facilities and equipment; and
(9) a 501(c)(3) corporation; and
G. "property" means any land, improvements thereon, buildings and any improvements thereto, machinery and equipment of any and all kinds necessary to the project, operating capital and any other personal properties deemed necessary in connection with the project."
SECTION 4. Section 4-59-4 NMSA 1978 (being Laws 1975, Chapter 286, Section 4, as amended) is amended to read:
"4-59-4. ADDITIONAL POWERS CONFERRED ON COUNTIES.--In addition to any other powers that it may now have, each county shall have the following powers:
A. to acquire, whether by construction, purchase, gift or lease, one or more projects, which shall be located within this state and shall be located within the county outside the boundaries of any incorporated municipality; provided, however, that:
(1) a class A county with a population of more than three hundred thousand may acquire projects located anywhere in the county; and
(2) a county shall not acquire any electricity generation, [or] transmission or energy storage facility project unless the school districts within the county in which the project is located receive annual in-lieu tax payments; provided that the annual in-lieu tax payments required by this paragraph shall be:
(a) payable to the school districts for the period the county owns and leases the project;
(b) in an aggregate amount equal to the amount received by the county multiplied by the percentage determined by dividing the average of the operating, capital improvement and bond mills imposed by the school districts in the county and state debt service mills as of the date of issuance of the bonds by the average of the mills imposed by all entities levying taxes on property in the county as of such date;
(c) shared among the school districts located within the county equally; and
(d) not be less than the amount due to the school districts in the tax year immediately preceding the issuance of the bonds from the property included in a project, had such project not been created;
B. to sell or lease or otherwise dispose of any or all of its projects upon such terms and conditions as the commission may deem advisable and as shall not conflict with the provisions of the County Industrial Revenue Bond Act; and
C. to issue revenue bonds for the purpose of defraying the cost of acquiring, by construction and purchase or either, any project and to secure the payment of such bonds, all as provided in the County Industrial Revenue Bond Act. No county shall have the power to operate any project as a business or in any manner except as lessor thereof."
SECTION 5. Section 7-1-6.40 NMSA 1978 (being Laws 1997, Chapter 182, Section 1, as amended) is amended to read:
"7-1-6.40. DISTRIBUTION OF LIQUOR EXCISE TAX--LOCAL DWI GRANT FUND--CERTAIN MUNICIPALITIES--DRUG COURT FUND--ALCOHOL HARMS ALLEVIATION FUND.--
A. A distribution pursuant to Section 7-1-6.1 NMSA 1978 in an amount equal to [forty-five] thirty-seven and one- fourth percent of the net receipts attributable to the liquor excise tax shall be made to the local DWI grant fund.
B. A distribution pursuant to Section 7-1-6.1 NMSA 1978 of [twenty thousand seven hundred fifty dollars ($20,750) monthly from] one-half percent of the net receipts attributable to the liquor excise tax shall be made to a municipality that is located in a class A county and that has a population according to the most recent federal decennial census of more than thirty thousand but less than sixty thousand and shall be used by the municipality only for the provision of alcohol treatment and rehabilitation services for street inebriates.
C. [Beginning July 1, 2019] A distribution pursuant to Section 7-1-6.1 NMSA 1978 in an amount equal to [five] four and one-fourth percent of the net receipts attributable to the liquor excise tax shall be made to the drug court fund.
D. A distribution pursuant to Section 7-1-6.1 NMSA 1978 in an amount equal to fifty-eight percent of the net receipts attributable to the liquor excise tax shall be made to the alcohol harms alleviation fund."
SECTION 6. Section 7-2-5.13 NMSA 1978 (being Laws 2022, Chapter 47, Section 6) is amended to read:
"7-2-5.13. EXEMPTION--ARMED FORCES RETIREMENT PAY.--
A. An individual who is an armed forces retiree may claim an exemption in the following amounts of military retirement pay includable, except for this exemption, in net income:
(1) for taxable year 2022, ten thousand dollars ($10,000);
(2) for taxable year 2023, twenty thousand dollars ($20,000); and
(3) for taxable years 2024 through [2026] 2031, thirty thousand dollars ($30,000).
B. As used in this section, "armed forces retiree" means a former member of the armed forces of the United States who has qualified by years of service or disability to separate from military service with lifetime benefits."
SECTION 7. Section 7-2-7 NMSA 1978 (being Laws 2005, Chapter 104, Section 4, as amended) 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, [2021] 2024:
[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 $157,500 $384 plus 4.9% of
excess over $12,000
Over $157,500 $7,513.50 plus 5.9% of
excess over $157,500.
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 $315,000 $768 plus 4.9% of
excess over $24,000
Over $315,000 $15,027 plus 5.9% of
excess over $315,000.
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 $210,000 $504.50 plus 4.9% of excess over $16,000
Over $210,000 $10,010.50 plus 5.9% of
excess over $210,000.]
A. For married individuals filing joint returns, heads of household and surviving spouses:
For taxable income: The tax shall be:
Not over $8,000 1.5% of taxable income
Over $8,000 but not over $25,000 $120 plus 3.2% of excess over $8,000
Over $25,000 but not over $50,000 $664 plus 4.3% of excess over $25,000
Over $50,000 but not over $100,000 $1,739 plus 4.7% of excess over $50,000
Over $100,000 but not over $200,000 $4,089 plus 4.9% of excess over $100,000
Over $200,000 but not over $500,000 $8,989 plus 6.5% of excess over $200,000
Over $500,000 $28,489 plus 6.9% of
excess over $500,000.
B. For single individuals and for estates and trusts:
For taxable income: The tax shall be:
Not over $5,500 1.5% of taxable income
Over $5,500 but not over $16,500 $82.50 plus 3.2% of excess over $5,500
Over $16,500 but not over $33,500 $434.50 plus 4.3% of
excess over $16,500
Over $33,500 but not over $66,500 $1,165.50 plus 4.7% of excess over $33,500
Over $66,500 but not over $133,500 $2,716.50 plus 4.9% of excess over $66,500
Over $133,500 but not over $333,500 $5,999.50 plus 6.5% of excess over $133,500
Over $333,500 $18,999.50 plus 6.9% of excess over $333,500.
C. For married individuals filing separate returns:
For taxable income: The tax shall be:
Not over $4,000 1.5% of taxable income
Over $4,000 but not over $12,500 $60.00 plus 3.2% of excess over $4,000
Over $12,500 but not over $25,000 $332 plus 4.3% of excess over $12,500
Over $25,000 but not over $50,000 $869.50 plus 4.7% of
excess over $25,000
Over $50,000 but not over $100,000 $2,044.50 plus 4.9% of excess over $50,000
Over $100,000 but not over $250,000 $4,494.50 plus 6.5% of excess over $100,000
Over $250,000 $14,244.50 plus 6.9% of excess over $250,000.
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 8. Section 7-2-14 NMSA 1978 (being Laws 1972, Chapter 20, Section 2, as amended) is amended to read:
"7-2-14. LOW-INCOME COMPREHENSIVE TAX REBATE.--
A. Except as otherwise provided in Subsection B of this section, any resident who files an individual New Mexico income tax return and who is not a dependent of another individual may claim a tax rebate 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. The tax rebate may be claimed even though the resident has no income taxable under the Income Tax Act. 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 tax rebate that would have been allowed on a joint return.
B. No claim for the tax rebate provided in this section shall be filed by a resident who was an inmate of a public institution for more than six months during the taxable year for which the tax rebate could be claimed or who was not physically present in New Mexico for at least six months during the taxable year for which the tax rebate could be claimed.
C. For the purposes of this section, the total number of exemptions for which a tax rebate may be claimed or allowed is determined by adding the number of federal exemptions allowable for federal income tax purposes for each individual included in the return who is domiciled in New Mexico plus two additional exemptions for each individual domiciled in New Mexico included in the return who is sixty-five years of age or older plus one additional exemption for each individual domiciled in New Mexico included in the return who, for federal income tax purposes, is blind plus one exemption for each minor child or stepchild of the resident 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 resident.
D. Except as provided in [Subsection F] Subsections F and G of this section, the tax rebate provided for in this section may be claimed in the amount shown in the following table:
Modified gross And the total number
income is: of exemptions is:
But Not 6 or
Over Over 1 2 3 4 5 More
[$ 0 $ 1,000 $ 195 $ 260 $ 325 $ 390 $ 455 $ 520
1,000 1,500 220 315 405 505 570 675
1,500 2,500 220 315 405 505 570 705
2,500 7,500 220 315 405 505 570 730
7,500 8,000 205 310 390 495 575 730
8,000 9,000 185 285 375 480 575 700
9,000 10,000 170 250 340 425 510 665
10,000 11,500 145 210 275 360 445 600
11,500 13,000 130 185 235 295 365 480
13,000 14,500 115 170 220 275 315 390
14,500 16,500 105 155 185 235 285 335
16,500 18,000 100 130 165 210 250 300
18,000 19,500 90 115 145 180 220 260
19,500 21,000 80 105 140 165 185 230
21,000 23,000 80 105 140 165 185 230
23,000 24,500 75 100 120 145 170 195
24,500 26,000 65 90 115 140 155 180
26,000 27,500 55 80 105 130 140 170
27,500 29,500 50 75 100 115 130 155
29,500 31,000 40 55 80 100 115 130
31,000 32,500 35 50 65 80 100 105
32,500 34,000 25 40 50 65 80 90
34,000 36,000 15 35 40 55 65 75]
$ 0 $ 1,000 $ 210 $ 280 $ 350 $ 420 $ 490 $ 560
1,000 1,500 240 340 435 545 615 730
1,500 2,500 240 340 435 545 615 760
2,500 8,000 240 340 435 545 615 790
8,000 8,500 220 335 420 535 620 790
8,500 9,500 200 310 405 520 620 755
9,500 11,000 185 270 365 460 550 720
11,000 12,500 155 225 295 390 480 650
12,500 14,000 140 200 255 320 395 520
14,000 15,500 125 185 240 295 340 420
15,500 18,000 115 165 200 255 310 360
18,000 19,500 110 140 180 225 270 325
19,500 21,000 95 125 155 195 240 280
21,000 22,500 85 115 150 180 200 250
22,500 25,000 85 115 150 180 200 250
25,000 26,500 80 110 130 155 185 210
26,500 28,000 70 95 125 150 165 195
28,000 29,500 60 85 115 140 150 185
29,500 32,000 55 80 110 125 140 165
32,000 33,500 45 60 85 110 125 140
33,500 35,000 40 55 70 85 110 115
35,000 36,500 25 45 55 70 85 95
36,500 39,000 15 40 45 60 70 80.
E. If a taxpayer's modified gross income is zero, the taxpayer may claim a credit in the amount shown in the first row of the table appropriate for the taxpayer's number of exemptions as adjusted by the provisions of Subsection F of this section.
F. For the [2022] 2024 taxable year and each subsequent taxable year, the amount of rebate shown in the table in Subsection D of this section shall be adjusted to account for inflation. The department shall make the adjustment by multiplying each amount of rebate 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 [2021] 2022. 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 no adjustment shall be made.
G. For the 2024 taxable year and each subsequent taxable year, the amount of modified gross income shown in the table in Subsection D of this section shall be adjusted to account for inflation. The department shall make the adjustment by multiplying each amount of modified gross income 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 2022. The result of the multiplication shall be rounded down to the nearest one hundred dollars ($100), except that if the result would be an amount less than the corresponding amount for the preceding taxable year, then no adjustment shall be made.
[G.] H. The tax rebates provided for in this section may be deducted from the taxpayer's New Mexico income tax liability for the taxable year. If the tax rebates exceed the taxpayer's income tax liability, the excess shall be refunded to the taxpayer.
[H.] I. For purposes of this section:
(1) "consumer price index" means the consumer price index for all urban consumers published by the United States department of labor for the month ending September 30; and
(2) "dependent" means "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 resident 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 resident."
SECTION 9. Section 7-2-18.22 NMSA 1978 (being Laws 2007, Chapter 361, Section 2) is amended to read:
"7-2-18.22. [TAX CREDIT] RURAL HEALTH CARE PRACTITIONER TAX CREDIT.--
A. A taxpayer who files an individual New Mexico tax return, who is not a dependent of another individual, who is an eligible health care practitioner and who has provided health care services in New Mexico in a rural health care underserved area in a taxable year may claim a credit against the tax liability imposed by the Income Tax Act. The credit provided in this section may be referred to as the "rural health care practitioner tax credit".
B. The rural health care practitioner tax credit may be claimed and allowed in an amount that shall not exceed:
(1) five thousand dollars ($5,000) for [all] eligible health care practitioners who are physicians, osteopathic physicians, dentists, clinical psychologists, podiatrists and optometrists who qualify pursuant to the provisions of this section [except the credit shall not exceed]; and
(2) three thousand dollars ($3,000) for [all] eligible health care practitioners who are pharmacists, dental hygienists, physician assistants, [certified nurse-midwives] certified registered nurse anesthetists, certified nurse practitioners, [and] clinical nurse specialists, registered nurses, midwives, licensed clinical social workers, licensed independent social workers, professional mental health counselors, professional clinical mental health counselors, marriage and family therapists, professional art therapists, alcohol and drug abuse counselors and physical therapists who qualify pursuant to the provisions of this section.
C. To qualify for the rural health care practitioner tax credit, an eligible health care practitioner shall have provided health care during [a] the taxable year for which the credit is claimed for at least [two thousand eighty] one thousand five hundred eighty-four hours at a practice site located in an approved rural health care underserved area. An eligible rural health care practitioner who provided health care services for at least [one thousand forty] seven hundred ninety-two hours but less than [two thousand eighty] one thousand five hundred eighty-four hours at a practice site located in an approved rural health care underserved area during [a] the taxable year for which the credit is claimed is eligible for one-half of the credit amount.
D. Before an eligible health care practitioner may claim the rural health care practitioner tax credit, the practitioner shall submit an application to the department of health that describes the practitioner's clinical practice and contains additional information that the department of health may require. The department of health shall determine whether an eligible health care practitioner qualifies for the rural health care practitioner tax credit and shall issue a certificate to each qualifying eligible health care practitioner. The department of health shall provide the taxation and revenue department appropriate information for all eligible health care practitioners to whom certificates are issued.
E. A taxpayer claiming the credit provided by this section shall submit a copy of the certificate issued by the department of health with the taxpayer's New Mexico income tax return for the taxable year. If the amount of the credit claimed exceeds a taxpayer's tax liability for the taxable year in which the credit is being claimed, the excess may be carried forward for three consecutive taxable years.
F. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the department in a manner required by the department.
G. The department shall compile an annual report on the tax credit provided by this section that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the credit. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the tax credit.
[F.] H. As used in this section:
(1) "eligible health care practitioner" means:
[(a) a certified nurse-midwife licensed by the board of nursing as a registered nurse and licensed by the public health division of the department of health to practice nurse-midwifery as a certified nurse-midwife;
(b)] (a) a dentist or dental hygienist licensed pursuant to the Dental Health Care Act;
(b) a midwife licensed by the department of health;
(c) an optometrist licensed pursuant to the provisions of the Optometry Act;
(d) an osteopathic physician [licensed pursuant to the provisions of Chapter 61, Article 10 NMSA 1978] or an osteopathic physician assistant licensed pursuant to the provisions of the [Osteopathic Physicians' Assistants] Medical Practice Act;
(e) a physician or physician assistant licensed pursuant to the provisions of [Chapter 61, Article 6 NMSA 1978] the Medical Practice Act;
(f) a podiatrist licensed pursuant to the provisions of the Podiatry Act;
(g) a clinical psychologist licensed pursuant to the provisions of the Professional Psychologist Act; [and]
(h) a registered nurse [in advanced practice who has been prepared through additional formal education as provided in Sections 61-3-23.2 through 61-3-23.4 NMSA 1978 to function beyond the scope of practice of professional registered nursing, including certified nurse practitioners, certified registered nurse anesthetists and clinical nurse specialists] licensed pursuant to the provisions of the Nursing Practice Act;
(i) a pharmacist licensed pursuant to the provisions of the Pharmacy Act;
(j) a licensed clinical social worker or a licensed independent social worker licensed pursuant to the provisions of the Social Work Practice Act;
(k) a professional mental health counselor, a professional clinical mental health counselor, a marriage and family therapist, an alcohol and drug abuse counselor or a professional art therapist licensed pursuant to the provisions of the Counseling and Therapy Practice Act; and
(l) a physical therapist licensed pursuant to the provisions of the Physical Therapy Act;
(2) "health care underserved area" means a geographic area or practice location in which it has been determined by the department of health, through the use of indices and other standards set by the department of health, that sufficient health care services are not being provided;
(3) "practice site" means a private practice, public health clinic, hospital, public or private nonprofit primary care clinic or other health care service location in a health care underserved area; and
(4) "rural" means [an area or location identified by the department of health as falling outside of an urban area] a rural county or an unincorporated area of a partially rural county, as designated by the health resources and services administration of the United States department of health and human services."
SECTION 10. Section 7-2-18.34 NMSA 1978 (being Laws 2022, Chapter 47, Section 5) is amended to read:
"7-2-18.34. CHILD INCOME TAX CREDIT.--
A. For taxable years [beginning January 1, 2023 and] prior to January 1, 2032, a taxpayer who is a resident and is not a dependent of another individual may apply for, and the department may allow, a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act for each qualifying child of the taxpayer. The tax credit provided by this section may be referred to as the "child income tax credit".
B. Except as provided in Subsection D of this section, the child income tax credit may be claimed as shown in the following table:
Adjusted gross income is Amount of credit per
Over But not over qualifying child is
$ 0 $ 25,000 [$175] $600
25,000 50,000 [150] 400
50,000 75,000 [125] 200
75,000 100,000 100
100,000 200,000 75
200,000 350,000 50
350,000 25.
C. If a taxpayer's adjusted gross income is less than zero, the taxpayer may claim a tax credit in the amount shown in the first row of the table provided in Subsection B of this section.
D. For the 2024 taxable year and each subsequent taxable year, the amount of credit shown in the table in Subsection B of this section shall be adjusted to account for inflation. The department shall make the adjustment by multiplying each amount of credit 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 2022. 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 no adjustment shall be made.
[D.] E. To receive a child income tax credit, a taxpayer shall apply to the department on forms and in the manner prescribed by the department.
[E.] F. That portion of a child income tax credit that exceeds a taxpayer's tax liability in the taxable year in which the credit is claimed shall be refunded.
[F.] G. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the child income tax credit that would have been claimed on a joint return.
[G.] H. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the department in a manner required by the department.
[H.] I. The department shall compile an annual report on the child income tax credit that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the effectiveness of the credit. The department shall compile and present the annual report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the tax credit.
[I.] J. As used in this section:
(1) "consumer price index" means the consumer price index for all urban consumers published by the United States department of labor for the month ending September 30; and
(2) "qualifying child" means "qualifying child" as defined by Section 152(c) of the Internal Revenue Code, as that section may be amended or renumbered, but includes any minor child or stepchild of the taxpayer who would be a qualifying child 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."
SECTION 11. 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)] two thousand five hundred dollars ($2,500); or
(2) forty percent of up to three hundred thousand dollars ($300,000) of the taxpayer's net capital gain income from the sale of a business that is allocated or apportioned to New Mexico pursuant to Section 7-2-11 NMSA 1978 for the taxable year for which the deduction is being claimed.
B. 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 12. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] ADDITIONAL 2021 INCOME TAX REBATES.--
A. A resident who files an individual New Mexico income tax return for taxable year 2021 and who is not a dependent of another individual is eligible for a tax rebate pursuant to this section in the following amounts:
(1) six hundred dollars ($600) for heads of household, surviving spouses and married individuals filing joint returns; and
(2) three hundred dollars ($300) for single individuals and married individuals filing separate returns.
B. The rebates shall be made as soon as practicable after a return is received; provided that a rebate shall not be allowed for a return filed after May 31, 2024.
C. The rebates provided by this section may be deducted from the taxpayer's New Mexico income tax liability for taxable year 2021. If the amount of rebate exceeds the taxpayer's income tax liability, the excess shall be refunded to the taxpayer.
D. The department may require a taxpayer to claim a rebate provided by this section on forms and in a manner required by the department."
SECTION 13. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] ELECTRIC VEHICLE INCOME TAX CREDIT.--
A. A taxpayer who is not a dependent of another individual and who, beginning on the effective date of this section and prior to January 1, 2028, purchases an electric vehicle or enters into a new lease of at least three years for an electric vehicle may claim a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act in an amount provided in Subsection B of this section. The tax credit provided by this section may be referred to as the "electric vehicle income tax credit".
B. The electric vehicle income tax credit shall be in an amount equal to two thousand five hundred dollars ($2,500), except that the amount of credit shall be in an amount equal to four thousand dollars ($4,000) for a taxpayer with an annual household adjusted gross income equal to or less than two hundred percent of the federal poverty level guidelines published by the United States department of health and human services.
C. A taxpayer shall apply for certification of eligibility for the electric vehicle income tax credit from the department on forms and in the manner prescribed by the department. Except as provided in Subsection H of this section, only one electric vehicle income tax credit shall be allowed for each electric vehicle purchased or leased. The application shall include proof of purchase or lease, the electric vehicle's registration or application for registration and any additional information that the department may require to determine eligibility for the credit. The department shall issue a dated certificate of eligibility to the taxpayer providing the amount of the electric vehicle income tax credit for which the taxpayer is eligible and the taxable year in which the credit may be claimed for an electric vehicle that was purchased or leased.
D. The aggregate amount of electric vehicle income tax credit claims that may be authorized for payment in any calendar year is ten million dollars ($10,000,000). If a taxpayer submits a claim for a tax credit but is unable to receive the tax credit because the claims for the calendar year exceed the limitation provided in this subsection, the taxpayer's claim shall be placed at the front of a queue of credit claimants for the subsequent calendar year in the order of the date on which the credit was authorized for payment. Completed applications for the tax credit shall be considered in the order received by the department.
E. Applications for certification of an electric vehicle income tax credit shall be made no later than one calendar year from the date in which the electric vehicle is purchased or the lease is entered into.
F. A certificate of eligibility for an electric vehicle income tax credit may be sold, exchanged or otherwise transferred to another taxpayer for the full value of the credit. The parties to such a transaction shall notify the department of the sale, exchange or transfer within ten days of the sale, exchange or transfer.
G. That portion of an approved electric vehicle income tax credit claimed by a taxpayer that exceeds the taxpayer's income tax liability in the taxable year in which an electric vehicle income tax credit is claimed shall be refunded to the taxpayer.
H. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the electric vehicle income tax credit that would have been claimed on a joint return.
I. A taxpayer may be allocated the right to claim the electric vehicle income tax credit in proportion to the taxpayer's ownership interest if the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership or limited liability company and that business entity has met all of the requirements to be eligible for the credit. The total credit claimed by all members of the partnership or limited liability company shall not exceed the allowable credit pursuant to this section.
J. A taxpayer shall submit to the department information required by the department with respect to the purchase or lease of an electric vehicle by the taxpayer during the taxable year for which the electric vehicle income tax credit is claimed.
K. The department shall compile an annual report on the electric vehicle income tax credit that shall include the number of taxpayers approved by the department to receive the tax credit, the aggregate amount of tax credits approved and any other information necessary to evaluate the tax credit. The department shall compile and present the annual report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the tax credit.
L. As used in this section:
(1) "electric vehicle" means a new motor vehicle registered or purchased in New Mexico that derives all or part of the vehicle's power from electricity stored in a battery that:
(a) has a capacity of not less than six kilowatt-hours;
(b) is capable of powering the vehicle for a range of at least thirty miles; and
(c) is capable of being recharged from an external source of electricity; and
(2) "motor vehicle" means a vehicle with four wheels that:
(a) is required under the Motor Vehicle Code to be registered in this state;
(b) is made by a manufacturer;
(c) has a base manufacturer suggested retail price, before options and destination charges, of fifty- five thousand dollars ($55,000) or less, before any taxes are imposed;
(d) is manufactured primarily for use on public streets, roads or highways;
(e) has not been modified from the original manufacturer specifications;
(f) is rated at not less than two thousand two hundred pounds unloaded base weight and not more than nine thousand seven hundred fifty pounds unloaded base weight; and
(g) has a maximum speed capability of at least sixty-five miles per hour."
SECTION 14. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] ELECTRIC VEHICLE CHARGING UNIT INCOME TAX CREDIT.--
A. A taxpayer who is not a dependent of another individual and who, beginning on the effective date of this section and prior to January 1, 2028, purchases and installs an electric vehicle charging unit may claim a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act. The tax credit provided by this section may be referred to as the "electric vehicle charging unit income tax credit".
B. The electric vehicle charging unit income tax credit shall not exceed three hundred dollars ($300) or the cost to purchase and install an electric vehicle charging unit, whichever is less.
C. A taxpayer shall apply for certification of eligibility for the electric vehicle charging unit income tax credit from the department on forms and in the manner prescribed by the department. The aggregate amount of electric vehicle charging unit income tax credits that may be certified as eligible in any calendar year is one million dollars ($1,000,000). Completed applications shall be considered in the order received. If a taxpayer submits a claim for a tax credit but is unable to receive the tax credit because the claims for the calendar year exceed the limitation provided in this subsection, the taxpayer's claim shall be placed at the front of a queue of credit claimants for the subsequent calendar year in the order of the date on which the credit was authorized for payment.
D. An application for certification of eligibility shall include a receipt for the purchase of the electric vehicle charging unit, a copy of the data sheet that specifies the connector type, plug type, voltage and current of the electric vehicle charging unit and any additional information that the department may require to determine eligibility for the credit. The department shall issue a dated certificate of eligibility to the taxpayer providing the amount of the electric vehicle charging unit income tax credit for which the taxpayer is eligible and the taxable year in which the credit may be claimed.
E. Applications for certification of an electric vehicle charging unit income tax credit shall be made no later than one calendar year from the date in which the electric vehicle charging unit for which the credit is claimed is purchased and installed.
F. That portion of an electric vehicle charging unit income tax credit that exceeds a taxpayer's income tax liability in the taxable year in which an electric vehicle charging unit income tax credit is claimed shall be refunded to the taxpayer.
G. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the electric vehicle charging unit income tax credit that would have been claimed on a joint return.
H. A taxpayer may be allocated the right to claim the electric vehicle charging unit income tax credit in proportion to the taxpayer's ownership interest if the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership or limited liability company and that business entity has met all of the requirements to be eligible for the credit. The total credit claimed by all members of the partnership or limited liability company shall not exceed the allowable credit pursuant to this section.
I. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the tax credit to the department in a manner required by the department.
J. The department shall compile an annual report on the electric vehicle charging unit income tax credit that shall include the number of taxpayers approved by the department to receive the tax credit, the aggregate amount of tax credits approved and any other information necessary to evaluate the effectiveness of the tax credit. The department shall present the annual report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the effectiveness and cost of the tax credit and whether the tax credit is performing the purpose for which it was created.
K. As used in this section:
(1) "electric vehicle" means a motor vehicle subject to the registration fee pursuant to Section 66-6-2 or 66-6-4 NMSA 1978 that derives all or part of the vehicle's power from electricity stored in a battery that:
(a) has a capacity of not less than six kilowatt-hours;
(b) is capable of powering the vehicle for a range of at least thirty miles; and
(c) is capable of being recharged from an external source of electricity; and
(2) "electric vehicle charging unit" means a device that:
(a) is used to provide electricity to an electric vehicle;
(b) is designed to create a connection between an electricity source and the electric vehicle;
(c) uses the electric vehicle's control system to ensure that electricity flows at an appropriate voltage and current level; and
(d) is installed on residential property located in the state."
SECTION 15. A new section of the Income Tax Act is enacted to read:
"[NEW MATERIAL] ENERGY STORAGE SYSTEM INCOME TAX CREDIT.--
A. For taxable years prior to January 1, 2028, a taxpayer who is not a dependent of another individual and who, on or after March 1, 2023, purchases and installs an energy storage system on the taxpayer's residence or commercial or agricultural property in New Mexico may apply for, and the department may allow, a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act. The tax credit provided by this section may be referred to as the "energy storage system income tax credit".
B. The department may allow an energy storage system income tax credit of forty percent of the purchase and installation costs of an energy storage system certified pursuant to Subsection C of this section, up to a maximum amount of credit of five thousand dollars ($5,000) for a system installed on residential property and one hundred fifty thousand dollars ($150,000) for a system installed on commercial or agricultural property; provided that no more than one system per property shall be eligible for the credit. Costs related to equipment or installation costs for energy generation shall not be eligible.
C. A taxpayer shall apply for certification of eligibility for an energy storage system income tax credit from the energy, minerals and natural resources department on forms and in the manner prescribed by that department. The aggregate amount of credits that may be certified as eligible in any calendar year is four million dollars ($4,000,000). Completed applications shall be considered in the order received. If the annual aggregate amount has been met before certification of a taxpayer's application can be made, the application shall be placed in a queue to be issued in a subsequent calendar year. The application shall include proof of purchase and installation of an energy storage system, that the system meets technical specifications and requirements relating to safety, code and standards compliance, lists of eligible components and any additional information that the energy, minerals and natural resources department may require to determine eligibility for the credit. A dated certificate of eligibility shall be issued to the taxpayer providing the amount of credit for which the taxpayer is eligible and the taxable year in which the credit may be claimed.
D. A taxpayer may claim an energy storage system income tax credit for the taxable year in which the taxpayer purchases and installs the system. To receive the tax credit, a taxpayer shall apply to the department on forms and in the manner prescribed by the department within twelve months following the calendar year in which the system was installed. The application shall include a certification made pursuant to Subsection C of this section.
E. For that portion of an energy storage system income tax credit that exceeds a taxpayer's tax liability in the taxable year in which the credit is claimed, the excess shall be refunded to the taxpayer.
F. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the energy storage system income tax credit that would have been claimed on a joint return.
G. A taxpayer may be allocated the right to claim an energy storage system income tax credit in proportion to the taxpayer's ownership interest if the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership or limited liability company and that business entity has met all of the requirements to be eligible for the credit. The total credit claimed by all members of the partnership or limited liability company shall not exceed the allowable credit pursuant to this section.
H. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the credit to the taxation and revenue department in a manner required by that department.
I. The taxation and revenue department shall compile an annual report on the energy storage system income tax credit that shall include the number of taxpayers approved by the department to receive the credit, the aggregate amount of credits approved and any other information necessary to evaluate the credit. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the tax credit.
J. As used in this section, "energy storage system" means a stationary, commercially available, customer-sited system, including a battery and a battery paired with on-site generation, that is capable of retaining, storing and delivering electrical energy by chemical, thermal, mechanical or other means and:
(1) is installed as a stand-alone energy storage system or is grid-tied; provided that if the system is grid-tied, the system has the capability to provide grid services and control and communication infrastructure exists with the service provider;
(2) has been tested and certified by a nationally recognized testing laboratory;
(3) has a rating of four kilowatts or greater with a minimum of two hours of storage; and
(4) is installed for use with a new or existing photovoltaic system."
SECTION 16. Section 7-2A-5 NMSA 1978 (being Laws 1981, Chapter 37, Section 38, as amended) is amended to read:
"7-2A-5. CORPORATE INCOME TAX [RATES] RATE.--The corporate income tax imposed on corporations by Section 7-2A-3 NMSA 1978 shall be
[If the taxable income is: The tax shall be:
Not over $500,000 4.8% of taxable income
Over $500,000 $24,000 plus 5.9% of excess over $500,000]
five and nine-tenths percent of taxable income."
SECTION 17. Section 7-4-10 NMSA 1978 (being Laws 1993, Chapter 153, Section 1, as amended) is amended to read:
"7-4-10. APPORTIONMENT OF BUSINESS INCOME.--
A. Except as provided in [Subsections] Subsection B [and C] of this section, all business income shall be apportioned to this state by multiplying the income by [a fraction, the numerator of which is the property factor plus the payroll factor plus] the sales factor. [and the denominator of which is three.
B. If eighty percent or more of the New Mexico numerators of the property and payroll factors for a filing group, or for a taxpayer that is not a member of a filing group, are employed in manufacturing or operating a computer processing facility, the filing group or the taxpayer may elect to have business income apportioned to this state by multiplying the income by the sales factor for the taxable year.
C. If a filing group, or a taxpayer that is not a member of a filing group, has a headquarters operation in New Mexico, the filing group or the taxpayer may elect to have business income apportioned to this state by multiplying the income by the sales factor for the taxable year.
D. To elect the method of apportionment provided by Subsection B or C of this section, the taxpayer shall notify the department of the election, in writing, no later than the date on which the taxpayer files the return for the first taxable year to which the election will apply. The election shall apply as follows:
(1) if the election is made for taxable years beginning prior to January 1, 2020, to the taxable year in which the election is made and to each taxable year thereafter for three years, or until the taxable year ending prior to January 1, 2020, whichever is earlier;
(2) if the election is made for a taxable year beginning on or after January 1, 2020, to the taxable year in which the election is made and to each taxable year thereafter until the taxpayer notifies the department, in writing, that the election is terminated, except that the taxpayer shall not terminate the election until the method of apportioning business income provided by Subsection B or C of this section has been used by the taxpayer for at least three consecutive taxable years, including a total of at least thirty-six calendar months; and
(3) if the election is made by a qualifying filing group, the election shall apply to the members of the filing group properly included pursuant to Section 7-2A-8.3 NMSA 1978.
E. For purposes of this section:
(1) "filing group" means "filing group" as that term is defined in the Corporate Income and Franchise Tax Act;
(2) "headquarters operation" means:
(a) the center of operations of a business: 1) where corporate staff employees are physically employed; 2) where the centralized functions are primarily performed, including administrative, planning, managerial, human resources, purchasing, information technology and accounting, but not including operating a call center; 3) the function and purpose of which is to manage and direct most aspects and functions of the business operations within a subdivided area of the United States; 4) from which final authority over regional or subregional offices, operating facilities and any other offices of the business are issued; and 5) including national and regional headquarters if the national headquarters is subordinate only to the ownership of the business or its representatives and the regional headquarters is subordinate to the national headquarters; or
(b) the center of operations of a business: 1) the function and purpose of which is to manage and direct most aspects of one or more centralized functions; and 2) from which final authority over one or more centralized functions is issued;
(3) "manufacturing" means combining or processing components or materials to increase their value for sale in the ordinary course of business, but does not include:
(a) construction;
(b) farming;
(c) power generation; provided that for taxable years beginning prior to January 1, 2024, "manufacturing" includes electricity generation at a facility that does not require location approval and a certificate of convenience and necessity prior to commencing construction or operation of the facility pursuant to the Public Utility Act;
(d) processing natural resources, including hydrocarbons; or
(e) processing or preparation of meals for immediate consumption; and
(4) "operating a computer processing facility" means managing the necessary and ancillary activities for the operation of a facility primarily used to process data or information, but does not include managing the operation of facilities that are predominantly used to support sales of tangible property or the provision of banking, financial or professional services.]
B. For a taxable year prior to January 1, 2027, all business income of a taxpayer that is a railroad shall be apportioned to this state by multiplying the income by a fraction, the numerator of which is the property factor plus the payroll factor plus the sales factor and the denominator of which is three."
SECTION 18. Section 7-9-4 NMSA 1978 (being Laws 1966, Chapter 47, Section 4, as amended) is amended to read:
"7-9-4. IMPOSITION AND RATE OF TAX--DENOMINATION AS "GROSS RECEIPTS TAX".--
A. For the privilege of engaging in business, an excise tax equal to the following percentages of gross receipts is imposed on any person engaging in business in New Mexico:
(1) prior to July 1, [2023, five] 2024, four and one-half percent; and
(2) beginning July 1, [2023, four and seven-eighths] 2024, four and three-eighths percent, except as provided in Subsection C of this section.
B. The tax imposed by this section shall be referred to as the "gross receipts tax".
C. If, for any single fiscal year occurring after fiscal year 2025 and prior to fiscal year 2030, gross receipts tax revenues are less than ninety-five percent of the gross receipts tax revenues for the previous fiscal year, as determined by the secretary of finance and administration, the rate of the gross receipts tax shall be [five and one-eighth] four and three-fourths percent beginning on the July 1 following the determination made by the secretary of finance and administration.
D. On or before February 1 of each year, until the rate of the gross receipts tax is adjusted to [five and one-eighth] four and three-fourths percent pursuant to Subsection C of this section, the secretary of finance and administration shall make a determination for the purposes of Subsection C of this section. If the rate of tax is adjusted pursuant to that subsection, the secretary shall certify to the secretary of taxation and revenue that the rate of the gross receipts tax shall be [five and one-eighth] four and three-fourths percent, effective on the following July 1.
E. As used in this section, "gross receipts tax revenues" means the net receipts attributable to the gross receipts tax and distributed to the general fund."
SECTION 19. Section 7-9-7 NMSA 1978 (being Laws 1966, Chapter 47, Section 7, as amended) is amended to read:
"7-9-7. IMPOSITION AND RATE OF TAX--DENOMINATION AS "COMPENSATING TAX".--
A. For the privilege of making taxable use of tangible personal property in New Mexico, there is imposed on the person using the property an excise tax equal to [five] four and one-half percent prior to July 1, [2023] 2024 and four and [seven-eighths] three-eighths percent beginning July 1, [2023] 2025, except as provided in Subsection G of this section, of the value of tangible property that was:
(1) manufactured by the person using the property in the state; or
(2) acquired in a transaction for which the seller's receipts were not subject to the gross receipts tax.
B. For the purpose of Subsection A of this section, value of tangible personal property shall be the adjusted basis of the property for federal income tax purposes determined as of the time of acquisition or introduction into this state or of conversion of the property to taxable use, whichever is later. If no adjusted basis for federal income tax purposes is established for the property, a reasonable value of the property shall be used.
C. For the privilege of making taxable use of a license or franchise in New Mexico, there is imposed on the person using the license or franchise an excise tax equal to the rate provided in Subsection A or G of this section, as applicable, against the value of the license or franchise in its use in this state. The department by rule, ruling or instruction shall fairly apportion, where appropriate, the value of a license or franchise to its value in use in New Mexico. The tax shall apply only to the value of a license or franchise used in New Mexico where the license or franchise was acquired in a transaction the receipts from which were not subject to the gross receipts tax.
D. For the privilege of making taxable use of services in New Mexico, there is imposed on the person using the services an excise tax equal to the rate provided in Subsection A or G of this section, as applicable, against the value of the services at the time the services were performed or the product of the service was acquired. For use of services to be a taxable use pursuant to this subsection, the services shall have been acquired in a transaction the receipts from which were not subject to the gross receipts tax.
E. For purposes of this section, receipts are not subject to the gross receipts tax if the person responsible for the gross receipts tax on those receipts lacked nexus in New Mexico or the receipts were exempt or allowed to be deducted pursuant to the Gross Receipts and Compensating Tax Act.
F. The tax imposed by this section shall be referred to as the "compensating tax".
G. If the gross receipts tax is increased to [five and one-eighth] four and three-fourths percent pursuant to Subsection C of Section 7-9-4 NMSA 1978, the rate of the compensating tax shall be [five and one-eighth] four and three-fourths percent.
H. As used in this section, "taxable use" means use by a person who acquires tangible personal property, a license, a franchise or a service, and the use of which would not have qualified for an exemption or deduction pursuant to the Gross Receipts and Compensating Tax Act."
SECTION 20. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:
"[NEW MATERIAL] DEDUCTIONS--GROSS RECEIPTS--CHILD CARE ASSISTANCE THROUGH A LICENSED CHILD CARE ASSISTANCE PROGRAM--PRE-KINDERGARTEN SERVICES BY FOR-PROFIT PRE-KINDERGARTEN PROVIDERS.--
A. Prior to July 1, 2033, receipts from the sale of child care assistance services by a taxpayer pursuant to a contract or grant with the early childhood education and care department to provide such services through a licensed child care assistance program may be deducted from gross receipts.
B. Prior to July 1, 2033, receipts of for-profit pre-kindergarten providers for the sale of pre-kindergarten services pursuant to the Pre-Kindergarten Act may be deducted from gross receipts.
C. A taxpayer allowed a deduction pursuant to this section shall report the amount of the deduction separately in a manner required by the department.
D. The department shall compile an annual report on the deductions provided by this section that shall include the number of taxpayers that claimed each deduction, the aggregate amount of deductions claimed and any other information necessary to evaluate the effectiveness of the deductions. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the deductions.
E. As used in this section:
(1) "child care assistance" means "child care assistance" or "early childhood care assistance", as those terms are defined in the Early Childhood Care Accountability Act; and
(2) "licensed child care assistance program" means "licensed child care program", "licensed early childhood care program" or "licensed exempt child care program", as those terms are defined in the Early Childhood Care Accountability Act."
SECTION 21. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:
"[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS TAX--ENVIRONMENTAL MODIFICATIONS FOR MEDICAID RECIPIENTS.--
A. Prior to July 1, 2033, receipts of an eligible provider for environmental modification services reimbursed by the medical assistance division may be deducted from gross receipts.
B. A taxpayer allowed a deduction pursuant to this section shall report the amount of the deduction separately in a manner required by the department.
C. The department shall compile an annual report on the deductions provided by this section that shall include the number of taxpayers that claimed each deduction, the aggregate amount of deductions claimed and any other information necessary to evaluate the effectiveness of the deductions. The department shall present the report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the deductions.
D. As used in this section:
(1) "eligible provider" means a provider who meets requirements of the medical assistance division to provide environmental modifications pursuant to a waiver granted by the federal department of health and human services to provide home and community-based services to recipients;
(2) "environmental modifications" include the purchasing and installing of equipment or making physical adaptions to a recipient's residence that are necessary to ensure the health, welfare and safety of the recipient or enhance the recipient's access to the home environment and increase the recipient's ability to act independently;
(3) "medicaid" means the medical assistance program established pursuant to Title 19 of the federal Social Security Act and regulations issued pursuant to that act;
(4) "medical assistance division" means the medical assistance division of the human services department; and
(5) "recipient" means a person whom the department has determined to be eligible to receive medicaid- related services and who meets the financial and medical level of care criteria to receive medical assistance division services through one of the division's waiver programs granted by the federal department of health and human services."
SECTION 22. Section 7-12A-3 NMSA 1978 (being Laws 1986, Chapter 112, Section 4, as amended) is amended to read:
"7-12A-3. IMPOSITION AND RATES OF TAX--REDUCTION OF RATE FOR CERTAIN TOBACCO PRODUCTS--DENOMINATION AS "TOBACCO PRODUCTS TAX"--DATE PAYMENT OF TAX DUE.--
A. For the manufacture or acquisition of [tobacco] certain products in New Mexico [not including cigars, little cigars, e-liquid, e-cigarettes or closed system cartridges] to be distributed in the ordinary course of business and for the consumption of [tobacco] certain products in New Mexico, there is imposed an excise tax at the [rate of twenty-five percent of the product value of the tobacco products
B. For the manufacture or acquisition of] following rates:
(1) for cigars, [in New Mexico to be distributed in the ordinary course of business and for the consumption of cigars in New Mexico, there is imposed an excise tax at a rate equal to] twenty-five percent of the product value of the cigar; [not to exceed fifty cents ($.50) per cigar
C. For the manufacture or acquisition of]
(2) for little cigars, [in New Mexico to be distributed in the ordinary course of business and for the consumption of little cigars in New Mexico, there is imposed an excise tax at] a rate equal to the rate imposed on cigarettes pursuant to Section 7-12-3 NMSA 1978 per package of little cigars;
[D. For the manufacture or acquisition of]
(3) for e-liquid, [in New Mexico to be distributed in the ordinary course of business and for the consumption of e-liquid in New Mexico, there is imposed an excise tax at a rate equal to] twelve and one-half percent of the product value of the e-liquid;
[E. For the manufacture or acquisition of]
(4) for closed system cartridges, [in New Mexico to be distributed in the ordinary course of business, there is imposed an excise tax at a rate of] fifty cents ($.50) per closed system cartridge; and
(5) for all other tobacco products, twenty-five percent of the value of the tobacco product.
[H.] B. The taxes imposed by this section may be referred to as the "tobacco products tax".
[I.] C. The tobacco products tax shall be paid by the first purchaser on or before the twenty-fifth day of the month following the month in which the taxable event occurs."
SECTION 23. Section 7-14-10 NMSA 1978 (being Laws 1988, Chapter 73, Section 20, as amended) is amended to read:
"7-14-10. DISTRIBUTION OF PROCEEDS.--The receipts from the tax and any associated interest and penalties shall be deposited in the "motor vehicle suspense fund", hereby created in the state treasury. As of the end of each month, the net receipts attributable to the tax and associated penalties and interest shall be distributed as follows:
A. [fifty-nine and thirty-nine hundredths] prior to July 1, 2024:
(1) fifty-three and fourteen hundredths percent to the general fund;
[B.] (2) twenty-one and eighty-six hundredths percent to the state road fund; and
[C. eighteen and seventy-five hundredths]
(3) twenty-five percent to the transportation project fund; and
B. beginning July 1, 2024:
(1) seventy-five percent to the state road fund; and
(2) twenty-five percent to the transportation project fund."
SECTION 24. Section 7-17-5 NMSA 1978 (being Laws 1993, Chapter 65, Section 8, as amended) is amended to read:
"7-17-5. IMPOSITION AND RATE OF LIQUOR EXCISE TAX.--
A. There is imposed on a wholesaler who sells alcoholic beverages on which the tax imposed by this section has not been paid an excise tax, to be referred to as the "liquor excise tax", at the [following] rates provided in Subsections B through F of this section on alcoholic beverages sold.
[(1) on spirituous liquors, except as provided in Paragraph (9) of this subsection, one dollar sixty cents ($1.60) per liter;
(2) on beer, except as provided in Paragraph (5) of this subsection, forty-one cents ($.41) per gallon;
(3) on wine, except as provided in Paragraphs (4) and (6) of this subsection, forty-five cents ($.45) per liter;
(4) on fortified wine, one dollar fifty cents ($1.50) per liter;
(5) on beer manufactured or produced by a microbrewer and sold in this state, provided that proof is furnished to the department that the beer was manufactured or produced by a microbrewer, eight cents ($.08) per gallon on the first thirty thousand barrels sold, twenty-eight cents ($.28) per gallon for all barrels sold over thirty thousand barrels but less than sixty thousand barrels and forty-one cents ($.41) per gallon for sixty thousand or more barrels sold;
(6) on wine manufactured or produced by a small winegrower and sold in this state, provided that proof is furnished to the department that the wine was manufactured or produced by a small winegrower:
(a) ten cents ($.10) per liter on the first eighty thousand liters sold;
(b) twenty cents ($.20) per liter on each liter sold over eighty thousand liters but not over nine hundred fifty thousand liters; and
(c) thirty cents ($.30) per liter on each liter sold over nine hundred fifty thousand liters but not over one million five hundred thousand liters;
(7) on cider, except as provided in Paragraph (8) of this subsection, forty-one cents ($.41) per gallon;
(8) on cider manufactured or produced by a small winegrower and sold in this state, provided that proof is furnished to the department that the cider was manufactured or produced by a small winegrower, eight cents ($.08) per gallon on the first thirty thousand barrels sold, twenty-eight cents ($.28) per gallon for all barrels sold over thirty thousand barrels but less than sixty thousand barrels and forty-one cents ($.41) per gallon for sixty thousand or more barrels sold; and
(9) on spirituous liquors manufactured or produced by a craft distiller licensed pursuant to Section 60-6A-6.1 NMSA 1978, provided that proof is provided to the department that the spirituous liquors were manufactured or produced by a craft distiller, for products up to ten percent alcohol by volume, eight cents ($.08) per liter for the first two hundred fifty thousand liters sold and twenty-eight cents ($.28) per liter for the next two hundred fifty thousand liters sold and for products over ten percent alcohol by volume, thirty-two cents ($.32) per liter on the first one hundred seventy-five thousand liters sold and sixty-five cents ($.65) per liter on the next two hundred thousand liters sold.]
B. The liquor excise tax imposed on spirituous liquors is:
(1) if manufactured or produced by a craft distiller licensed pursuant to Section 60-6A-6.1 NMSA 1978; provided that proof is provided to the department that the spirituous liquors were manufactured or produced by a craft distiller:
(a) for products up to ten percent alcohol by volume: 1) eight cents ($.08) per liter for the first two hundred fifty thousand liters sold; and 2) twenty-eight cents ($.28) per liter for the next two hundred fifty thousand liters sold; and
(b) for products over ten percent alcohol by volume: 1) thirty-two cents ($.32) per liter on the first one hundred seventy-five thousand liters sold; and 2) sixty-five cents ($.65) per liter on the next two hundred thousand liters sold; and
(2) for all other manufacturers and producers, one dollar seventy-five cents ($1.75) per liter sold.
C. The liquor excise tax imposed on beer is:
(1) if manufactured or produced by a microbrewer and sold in this state; provided that proof is furnished to the department that the beer was manufactured or produced by a microbrewer:
(a) eight cents ($.08) per gallon on the first thirty thousand barrels sold;
(b) twenty-eight cents ($.28) per gallon for all barrels sold over thirty thousand barrels but less than sixty thousand barrels sold; and
(c) forty-one cents ($.41) per gallon for sixty thousand or more barrels sold; and
(2) for all other manufacturers or producers, fifty-six cents ($.56) per gallon sold.
D. The liquor excise tax imposed on cider is:
(1) if manufactured or produced by a small winegrower and sold in this state; provided that proof is furnished to the department that the cider was manufactured or produced by a small winegrower:
(a) eight cents ($.08) per gallon on the first thirty thousand barrels sold;
(b) twenty-eight cents ($.28) per gallon for all barrels sold over thirty thousand barrels but less than sixty thousand barrels sold; and
(c) forty-one cents ($.41) per gallon for sixty thousand or more barrels sold; and
(2) for all other manufacturers or producers, fifty-six cents ($.56) per gallon sold.
E. The liquor excise tax imposed on wine is:
(1) if manufactured or produced by a small winegrower and sold in this state; provided that proof is furnished to the department that the wine was manufactured or produced by a small winegrower:
(a) ten cents ($.10) per liter on the first eighty thousand liters sold;
(b) twenty cents ($.20) per liter on each liter sold over eighty thousand liters but not over nine hundred fifty thousand liters sold; and
(c) thirty cents ($.30) per liter on each liter sold over nine hundred fifty thousand liters but not over one million five hundred thousand liters sold; and
(2) for all other manufacturers and producers, sixty cents ($.60) per liter sold.
F. The liquor excise tax imposed on fortified wine is one dollar sixty-five cents ($1.65) per liter sold.
[B.] G. The volume of wine transferred from one winegrower to another winegrower for processing, bottling or storage and subsequent return to the transferor shall be excluded pursuant to Section 7-17-6 NMSA 1978 from the taxable volume of wine of the transferee. Wine transferred from an initial winegrower to a second winegrower remains a tax liability of the transferor, provided that if the wine is transferred to the transferee for the transferee's use or for resale, the transferee then assumes the liability for the tax due pursuant to this section.
[C.] H. A transfer of wine from a winegrower to a wholesaler for distribution of the wine transfers the liability for payment of the liquor excise tax to the wholesaler upon the sale of the wine by the wholesaler."
SECTION 25. [NEW MATERIAL] ALCOHOL HARMS ALLEVIATION FUND.--
A. The "alcohol harms alleviation fund" is created as a reverting fund in the state treasury. The fund consists of appropriations, distributions, gifts, grants, donations and bequests made to the fund and income from investment of the fund. The department of finance and administration shall administer the fund, and money in the fund is subject to appropriation by the legislature to the human services department, department of health, early childhood education and care department, public education department and higher education department for:
(1) alcohol harms prevention, treatment and recovery services;
(2) behavioral health treatment for justice-involved populations and others not covered by the state medicaid program or other health insurance;
(3) addressing social determinants of health related to alcohol misuse;
(4) support for victims of alcohol-related crimes, including domestic violence and sexual assault; and
(5) prevention and reduction of alcohol harms on lands of Indian nations, tribes and pueblos.
B. Money in the fund shall be expended by warrant of the secretary of finance and administration pursuant to vouchers signed by the secretary or the secretary's authorized representative.
SECTION 26. APPLICABILITY.--
A. The provisions of Sections 8 through 10 and 13 through 15 of this act apply to taxable years beginning on or after January 1, 2023.
B. The provisions of Sections 11, 16 and 17 of this act apply to taxable years beginning on or after January 1, 2024.
SECTION 27. EFFECTIVE DATE.--
A. The effective date of the provisions of Section 12 of this act is April 1, 2023.
B. The effective date of the provisions of Sections 1 through 4 and 18 through 23 of this act is July 1, 2023.
C. The effective date of the provisions of Sections 7, 11, 16 and 17 of this act is January 1, 2024.
D. The effective date of the provisions of Sections 5, 24 and 25 of this act is July 1, 2024.
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