VARIOUS INCOME TAX DEDUCTIONS

HB 264 creates new tax deductions for New Mexico taxpayers earning tips (based on federal Section 224), overtime pay (federal Section 225), and Social Security income (federal Section 151). It replaces the Working Families Tax Credit with a state Earned Income Tax Credit (EITC) modeled after federal rules, adds a new Foster Parent and Guardian Income Tax Credit, and expands the medical expense deduction to apply to taxpayers of all income levels. The bill also extends tax deductions for healthcare practitioners to include patient coinsurance payments. These provisions directly affect low-to-moderate income earners, tip-based workers, retirees, and foster care providers by modifying how their income is taxed under New Mexico law.