Taxation and Revenue

House Memorial 62 requests the Taxation and Revenue Department to convene a task force to study short-term rental tax practices. The study will examine centralized tax collection, uniform property classification across counties, and the economic impacts of short-term rentals on tourism, workforce development, and rural infrastructure funding. The task force must include county officials, rental associations, tourism departments, and rural stakeholders. Its findings, due by October 2026, will inform potential future policies on tax collection and revenue allocation for local services.

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.

SB 240 authorizes New Mexico to issue bonds funded by severance taxes (taxes on oil, gas, and mineral extraction) to finance state capital projects like building construction, vehicle purchases, and equipment. It requires state agencies to certify their need for funds by the end of 2028 and to spend at least 5% of the bond proceeds within six months and 85% within three years of receiving the money. Unspent funds must be returned to the state treasury by 2030 or within six months of project completion, whichever comes first, preventing long-term budgeting of unused funds. This ensures timely project spending while holding agencies accountable for efficient use of bond proceeds.

SB 151 adjusts New Mexico's corporate tax calculation to better align with federal rules for certain income types. It modifies the state's definition of "base income" by adding back specific federal deductions (like interest from state bonds) and subtracting amounts for bonus depreciation and interest expenses that the federal government allows. This bill directly affects corporations operating in New Mexico that file federal tax returns, particularly those with income from controlled foreign corporations. The key change ensures New Mexico's tax calculation accounts for federal adjustments related to foreign income and depreciation, while applying standard apportionment rules to attributed income.

HB 342 limits annual increases in property tax valuations for residential properties to 3% (capping at 103% of prior year's value or 106.1% of value from two years prior), excluding new homes, certain improvements (like solar systems), and properties with ownership changes or zoning shifts. It also imposes a temporary 12-year cap (2025-2037) on valuation increases for nonresidential property (businesses). The bill requires homeowners to file affidavits for specific property transfers (with exemptions for family transfers or disasters), updates veteran tax exemption rules to align with recent voter-approved changes, and removes the requirement to mail residential property declarations to owners. Administrative penalties are added for late affidavit filings, and county valuation protest board pay is adjusted for inflation.