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HOUSE BILL 14
57TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 2025
INTRODUCED BY
Derrick J. Lente and Javier MartÃnez
AN ACT
RELATING TO TAXATION; REPEALING THE WORKING FAMILIES TAX CREDIT
AND ENACTING THE EARNED INCOME TAX CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 7-2-18.15 NMSA 1978 (being Laws 2007,
Chapter 45, Section 9, as amended) is repealed and a new
Section 7-2-18.15 NMSA 1978 is enacted to read:
"7-2-18.15. [NEW MATERIAL ] EARNED INCOME TAX CREDIT.--
A. The credit provided by this section may be
referred to as the "earned income tax credit". A taxpayer who
is an eligible individual may claim the earned income tax
credit against the taxpayer's tax liability imposed pursuant to
the Income Tax Act in an amount equal to the credit percentage
of so much of the taxpayer's earned income for the taxable year
as does not exceed the earned income amount; provided that the
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amount of the credit shall not exceed the excess of:
(1) the credit percentage of the earned income
amount; over
(2) the phaseout percentage of so much of the
adjusted gross income or, if greater, the earned income, of the
taxpayer for the taxable year as exceeds the phaseout amount.
B. The credit percentage and the phaseout
percentage shall be determined as follows:
In the case of a taxpayer The credit The phaseout
with: percentage is: percentage is:
1 qualifying child 10.2% 4.8%
2 qualifying children 12% 6.3%
3 or more qualifying children 13.5% 6.3%
No qualifying children 2.3% 1.8%.
C. Except as provided in Subsections E and F of
this section, the earned income amount and the phaseout amount
shall be determined as follows:
In the case of a taxpayer The earned The phaseout
with: income amount amount is:
is:
1 qualifying child $11,000 $31,000
2 or more qualifying children $15,200 $35,200
No qualifying children $8,000 $25,000.
D. For married individuals filing joint returns,
the phaseout amount shall be increased by five thousand dollars
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($5,000).
E. Except as provided in Subsection F of this
section, if the greater of an eligible individual's earned
income or adjusted gross income is less than the earned income
amount and the amount of credit is less than one hundred
dollars ($100), the amount of the credit shall be one hundred
dollars ($100).
F. For the 2026 taxable year and each subsequent
taxable year, the earned income amounts and phaseout amounts
shown in the table in Subsection C of this section and the
amount of credit provided in Subsection E 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 taxable year 2025.
The result of the multiplication shall be rounded to the
nearest ten dollars ($10.00), 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. The secretary shall reflect the provisions of
Subsections B and C of this section in tables that shall have
income brackets of not greater than fifty dollars ($50.00) each
for:
(1) earned income between zero and the amount
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of earned income at which the credit is phased out under
Subsection C of this section; and
(2) adjusted gross income between the dollar
amount at which the phase out begins under Subsection C of this
section and the amount of adjusted gross income at which the
credit is phased out under that subsection.
H. That portion of credit that exceeds a taxpayer's
tax liability in the taxable year in which the credit is
claimed shall be refunded. A refund made to a taxpayer
pursuant to this section shall not be treated as income.
I. 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.
J. The credit provided by this section shall be
included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the total annual aggregate cost of
the credit.
K. As used in this section:
(1) "earned income" means "earned income" as
defined in 26 U.S.C. 32(c)(2);
(2) "eligible individual" means a resident who
is:
(a) an "eligible individual" pursuant to
the federal earned income tax credit who is eligible to claim
the federal earned income tax credit in the taxable year; or
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(b) an individual who would have been
eligible for the federal earned income tax credit but for the:
1) identification number requirement pursuant to 26 U.S.C.
32(m), as that section may be amended or renumbered; or 2) the
age requirement pursuant to 26 U.S.C. 32(c)(1)(A)(ii)(II), as
that section may be amended or renumbered; provided that the
taxpayer is at least eighteen years of age but has not reached
the age of twenty-five;
(3) "federal earned income tax credit" means
the federal tax credit allowed pursuant to 26 U.S.C. 32, as
that section may be amended or renumbered; and
(4) "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 2. APPLICABILITY.--The provisions of this act
apply to taxable years beginning on or after January 1, 2025.
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