Lawmakers rejected that plan from Republicans and eventually approved the full tax package with bipartisan support. Lawmakers quickly noted that plan would cost the state $2 billion, while the current proposal only costs around $180 million – and that’s already accounted for in the state budget proposal, along with major funding boosts for every state department. They proposed lowering everyone’s tax rate to just 1%, considering the state has billions of dollars in oil and gas money to work with. Lawmakers predict most families can expect up to $200 in savings, but some Republicans said that’s not enough.
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The rate is scheduled to phase down by one percentage point per year until the tax is phased out entirely in 2027. Lawmakers want to break that into three different brackets, while also slightly lowering the tax rate for the majority of New Mexicans. New Hampshire began phasing out its income tax on interest and dividend income in 2023, bringing the rate down from 5 to 4 percent.
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Right now, individual taxpayers earning anywhere between $16,000 and $210,000 a year are taxed at the same rate. The big ticket item is a major update to the state’s income tax brackets. The proposal includes tax credits for energy storage, rural health care practitioners, and even New Mexicans who lost their homes in some recent wildfires. Members of the House Taxation & Revenue Committee say this year’s tax package includes a lot of things from last year that were vetoed by the governor, and insisted this version should be un-vetoable. A massive tax package just crossed the halfway point at the Roundhouse after several hours of debate on the House floor. A massive tax package just crossed the halfway point at the Roundhouse after several hours of debate on the House floor.