If passed, SB108 would amend the Income Tax Act to introduce a new section providing an exemption specifically for Social Security income. This change is designed to impact individual taxpayers who receive such benefits, allowing them to claim an exemption that equals the amount included in their adjusted gross income attributable to Social Security. The exemption is limited to not exceed the individual’s net income, thus ensuring that it directly benefits those who most need it.
Summary
Senate Bill 108 proposes to exempt Social Security income from state income tax in New Mexico. By enacting this legislation, the bill aims to provide financial relief for seniors and individuals receiving Social Security benefits, thereby enhancing the disposable income of this demographic. The intent behind this legislation is to alleviate the tax burden on a vulnerable section of the population that relies heavily on fixed incomes, particularly as they age.
Contention
Notable points of contention surrounding SB108 relate to its fiscal implications for state revenues. Critics argue that while the exemption may benefit individual taxpayers, it could lead to reduced state funding that is crucial for public services, impacting overall state budget allocations. Proponents counter that exempting Social Security from income tax will encourage more retirees to settle in New Mexico, potentially spurring economic growth and offsetting revenue losses through increased consumer spending in the state.