Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Roybal Caballero
LAST UPDATED
ORIGINAL DATE 2/10/2025
SHORT TITLE Taxpayer Income Distribution
BILL
NUMBER House Bill 184
ANALYST Gray
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
General
Fund
$0 ($1,330,500) ($1,330,500) ($1,330,500) ($1,330,500) Recurring General Fund
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
TRD $0 $11.5 $0 $11.5 Nonrecurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
Agency Analysis Received From
New Mexico Attorney General (NMAG)
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of House Bill 184
House Bill 184 (HB184) creates a $1,000 annual rebate for New Mexico residents who filed a
tax return. As contemplated, HB184 would require the Department of Finance and
Administration (DFA) to make the distribution to taxpayers.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns, or June 20, 2025, if enacted.
House Bill 184 – Page 2
FISCAL IMPLICATIONS
The bill is expected to reduce general fund revenue by $1.3 billion in FY26. The Taxation and
Revenue Department (TRD) used data from the 2021 rebate provided by 7-2-7.7, which
incentivized the filing of more returns than on average in a taxable year. The agency writes:
TRD notes that no caveat in the bill excludes tax filers who are dependents of another tax
filer to receive this rebate. Thus, every tax return – even a return from an individual who
is a dependent on another return - meeting the residency requirement is included in the
fiscal impact calculation. TRD then determined how many returns are associated with
married filing jointly. Finally, Tax & Rev multiplied the number of joint returns by
$2,000 and all remaining returns by $1,000 to arrive at the aggregate fiscal impact. TRD
assumes the impact is flat as New Mexico’s population is projected to remain flat in the
near term.
The bill is scored in this analysis as carrying a revenue impact. However, it is unclear how the
DFA would administer this legislation, and it may be more appropriately labeled as an
appropriation because the department would draw funds from general fund balances, not from a
specific tax program. This analysis may be updated upon receipt of analysis from DFA.
TRD notes a minimal nonrecurring cost associated with this bill for system updates.
SIGNIFICANT ISSUES
TRD notes that the bill essentially lowers the personal income tax (PIT) liability for every New
Mexican by $1,000 each year and comes with a dramatic fiscal impact. The estimated costs
associated with HB184 would represent about 11 percent of recurring general fund revenues in
FY26. The agency notes:
PIT is an important tax policy tool that has the potential to further both horizontal equity,
by ensuring the same statutes apply to all taxpayers, and vertical equity, by ensuring the
tax burden is based on taxpayers’ ability to pay. This distribution erodes vertical equity
by distributing an equal amount of $1,000 regardless of the income of the tax filer and
their ability to pay PIT.
The agency goes on to observe that if the policy goal is to lower the PIT liability for residents,
adjusting the marginal PIT tax rate brackets—paired with increases of refundable credits and
rebates--would be a more efficient method. Other methods could more easily target those with
less disposable income, “preserving vertical equity while also increasing the economic impact as
those taxpayers spend the money in the local economy,” the agency writes.
Lastly, the agency notes that it is unclear why the legislation requires DFA to make the annual
distributions:
TRD is the administrator of taxes in New Mexico. This tax relief could much more
efficiently be handled with taxpayers claiming the intended rebate annually on their PIT
return. Doing this would also ensure that taxpayers who file an extension by April 15 but
do not ultimately follow through with filing a tax return by October 15 do not receive the
rebate. Finally, TRD garnishes tax refunds for certain offsets, including for child support
liabilities and federal unpaid taxes. Leaving this rebate with TRD rather than DFA will
ensure a taxpayer’s liabilities are paid before they receive any additional rebate. House Bill 184 – Page 3
TECHNICAL ISSUES
TRD makes note of several technical issues:
In subsection A, on page 1, DFA is to distribute $1,000 on or before April 15 to each
resident who has filed an income tax return for the “previous taxable year.” Yet, April
15th is the date that tax returns are due for the “previous taxable year”. TRD cannot
immediately process returns in order to create a data file to share with DFA for taxpayers
who file at or near the end of the filing period, as taxpayers will have until midnight on
April 15th to file. TRD suggests a distribution date of June 15th of each year. This will
allow time to produce the data file for DFA and still be within the fiscal year end date of
June 30th.
The bill does not specifically state whether filers who file a return or a request for an
extension after April 15 are entitled to the distribution. Some filers file their returns late
without requesting an extension, or file their requests for extension late. TRD suggests
amending the language of the bill on page 1, lines 21-22, to state “… for the previous
taxable year pursuant to the Income Tax Act on or before April 15 of the current taxable
year.” If late filers are allowed to claim the distribution, Tax & Rev will not be able to
meet the requirements of the bill to distribute to all qualifying taxpayers by April 15 or
any certain date. Furthermore, limiting eligibility to those who file their returns or
requests for extension on or before April 15 will encourage the timely filing of returns by
taxpayers.
This bill does not define an effective and applicability date for the distribution under
Section 1 by DFA. TRD suggests an effective date of January 1, 2027, for Section 1,
applicable to Tax Year 2026. This effective date will provide time for DFA and TRD to
establish data sharing processes and procedures to securely share taxpayer data.
Subsection B defines “resident.” For brevity in the statute, TRD suggests that subsection
B reference statute 7-2-2 S NMSA 1978.
BG/hj/SL2