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HOUSE BILL 324
57TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 2025
INTRODUCED BY
Rod Montoya and Jonathan A. Henry and Mark Duncan
AN ACT
RELATING TO PRIVATE EDUCATION; PROVIDING FOR THE AUTHORIZATION
OF SCHOOL TUITION ORGANIZATIONS TO AWARD EDUCATIONAL
SCHOLARSHIPS TO CERTAIN LOW-INCOME STUDENTS TO ATTEND PRIVATE
SCHOOLS; CREATING THE EDUCATIONAL SCHOLARSHIP INCOME TAX CREDIT
AND THE EDUCATIONAL SCHOLARSHIP CORPORATE INCOME TAX CREDIT.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SCHOOL TUITION ORGANIZATIONS--
AUTHORIZATION TO AWARD EDUCATIONAL SCHOLARSHIPS TO PRIVATE
SCHOOLS.--
A. The department may authorize a school tuition
organization to award educational scholarships to eligible
students to attend a private school in New Mexico of the
students' parents' choice pursuant to this section.
B. A school tuition organization shall apply for
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authorization on forms and in a manner prescribed by the
department. To be eligible as a school tuition organization,
the organization shall:
(1) allocate at least ninety percent of the
organization's annual revenue received from contributions for
educational scholarships to eligible students to attend private
schools in New Mexico;
(2) not limit the availability of educational
scholarships to students of only one private school;
(3) not allow donors to designate student
beneficiaries as a condition of any contribution to the
organization or facilitate, encourage or knowingly allow the
exchange of beneficiary student designations;
(4) include on the organization's website, if
one exists, the percentage and total dollar amount of
educational scholarships awarded during the previous fiscal
year;
(5) award educational scholarships only to
eligible students; and
(6) not award educational scholarships to
attend a public, tribal or federal bureau of Indian education
school.
C. If an individual educational scholarship exceeds
the tuition of the private school that an eligible student
attends, the amount in excess shall be returned to the school
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tuition organization that made the award. The school tuition
organization may allocate the returned amount:
(1) as a multi-year award for that student; or
(2) for educational scholarships for other
eligible students.
D. On or before September 30 of each year, each
school tuition organization shall report electronically to the
department, in a form prescribed by the department, the
following information:
(1) the name, address and contact person of
the school tuition organization;
(2) the names, job titles and annual salaries
of the three employees who receive the highest annual salaries
from the school tuition organization;
(3) the total number of contributions received
during the previous fiscal year;
(4) the total dollar amount of contributions
received during the previous fiscal year;
(5) the total number of eligible students
awarded educational scholarships during the previous fiscal
year;
(6) the total dollar amount of educational
scholarships awarded during the previous fiscal year;
(7) the total dollar amount of money being
held for eligible students' scholarships in future years,
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including the amount allocated as a multi-year award pursuant
to Paragraph (1) of Subsection C of this section, with each
eligible student identified;
(8) for each private school to which
educational scholarships were awarded:
(a) the name and address of the private
school;
(b) the number of educational
scholarships awarded during the previous fiscal year; and
(c) the total dollar amount of
educational scholarships awarded during the previous fiscal
year; and
(9) the cost of an audit or financial review
required pursuant to Subsections F and G of this section paid
during the fiscal year.
E. The department shall post on its website a
report of the information it receives pursuant to Subsection D
of this section on or before January 1 of the calendar year
following the year in which the information is received.
F. On or before September 30 of each year, a school
tuition organization that received five hundred thousand
dollars ($500,000) or more in contributions in the previous
fiscal year shall provide for a financial audit of the
organization. The audit shall be conducted by an independent
certified public accountant licensed pursuant to the 1999
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Public Accountancy Act in accordance with generally accepted
auditing standards and shall evaluate the organization's
compliance with Paragraph (1) of Subsection B of this section.
The independent certified public accountant and any firm the
accountant is affiliated with shall be independent with respect
to the organization and its officers and directors, services
performed by the organization and all other independent
relationships of the organization, as prescribed by generally
accepted auditing standards.
G. On or before September 30 of each year, a school
tuition organization that received less than five hundred
thousand dollars ($500,000) in total donations in the previous
fiscal year shall provide for a financial review of the
organization. The review shall be conducted by an independent
certified public accountant licensed pursuant to the 1999
Public Accountancy Act in accordance with generally accepted
standards for accounting and review services and shall evaluate
the organization's compliance with the fiscal requirements of
this section. The independent certified public accountant and
any firm the certified public accountant is affiliated with
shall be independent with respect to the organization and its
officers and directors, services performed by the organization
and all other independent relationships of the organization, as
prescribed by generally accepted auditing standards.
H. Within five days after receiving an audit or
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financial review, the school tuition organization shall file a
signed copy of the audit or financial review with the
department. The school tuition organization shall pay the fees
and costs of the audit or financial review from the
organization's operating budget. The fees and costs shall be
excluded from the calculation of revenues spent on educational
scholarships.
I. The department shall:
(1) maintain a public registry of authorized
school tuition organizations;
(2) make the registry available to the public
on request; and
(3) post the registry on the department's
website.
J. As used in this section:
(1) "department" means the public education
department;
(2) "eligible student" means a qualified
student, as defined in the Public School Finance Act, who
resides in New Mexico and is member of a household for which
the total annual income does not exceed an amount used to
qualify for a reduced-price lunch through the federal school
lunch programs established pursuant to 42 USCA Sections 1751
through 1769, as amended; provided that once a student becomes
an eligible student, receives an educational scholarship and
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continuously attends the private school, the student shall
remain an eligible student regardless of household income until
the student graduates from high school or reaches twenty-one
years of age, and:
(a) attended a public school in New
Mexico as a full-time student for at least one full semester
immediately prior to receiving an educational scholarship and
enrolling in and transferring to a private school; or
(b) attended, as a full-time student, a
home school in New Mexico that meets the requirements of the
Public School Code for at least one full semester immediately
prior to receiving an educational scholarship and enrolling in
and transferring to a private school;
(3) "nonprofit organization" means an
organization that has been granted exemption from the federal
income tax by the United States commissioner of internal
revenue as organizations described in Section 501(c)(3) of the
United States Internal Revenue Code of 1986, as amended or
renumbered; and
(4) "school tuition organization" means a
nonprofit organization with a principal place of business in
New Mexico that provides educational scholarships to eligible
students attending private schools in New Mexico of their
parents' choice."
SECTION 2. A new section of the Income Tax Act is enacted
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to read:
"[NEW MATERIAL] EDUCATIONAL SCHOLARSHIP INCOME TAX
CREDIT.--
A. A taxpayer who is not a dependent of another
individual and who makes a contribution to a school tuition
organization pursuant to Section 1 of this 2025 act may apply
for, and the department may allow, a credit against the
taxpayer's tax liability imposed pursuant to the Income Tax
Act. The tax credit provided by this section may be referred
to as the "educational scholarship income tax credit".
B. The amount of the tax credit allowed by this
section shall be in an amount equal to the amount contributed
to a school tuition organization in a taxable year, not to
exceed seven hundred dollars ($700) for single individuals and
married individuals filing separate returns and one thousand
four hundred dollars ($1,400) for heads of household, surviving
spouses and married individuals filing joint returns; provided
that for the taxable year beginning January 1, 2026 and each
taxable year thereafter, the amount of credit shall be adjusted
to account for inflation. The department shall allow a tax
credit only for a contribution certified pursuant to Subsection
C of this section.
C. A taxpayer shall apply for certification of
eligibility for the tax credit allowed by this section from the
public education department on forms and in the manner
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prescribed by that department. The application shall include
evidence of a contribution to a school tuition organization
made pursuant to Section 1 of this 2025 act.
D. A taxpayer may claim the tax credit allowed by
this section for the taxable year in which the taxpayer makes a
contribution to a school tuition organization. To receive the
tax credit, a taxpayer shall apply to the department on forms
and in the manner prescribed by the department within twelve
months following the calendar year in which the contribution is
made. The application shall include a certification made
pursuant to Subsection C of this section.
E. That portion of the credit that exceeds a
taxpayer's tax liability in the taxable year in which the
credit is claimed shall not be refunded to the taxpayer but may
be carried forward for the following three consecutive taxable
years until the amount of the tax credit is exhausted.
F. A taxpayer allowed a tax credit pursuant to this
section shall report the amount of the tax credit to the
department in a manner required by that department.
G. 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."
SECTION 3. A new section of the Corporate Income and
Franchise Tax Act is enacted to read:
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"[NEW MATERIAL] EDUCATIONAL SCHOLARSHIP CORPORATE INCOME
TAX CREDIT.--
A. A taxpayer that makes a contribution to a school
tuition organization pursuant to Section 1 of this 2025 act may
apply for, and the department may allow, a credit against the
taxpayer's tax liability imposed pursuant to the Corporate
Income and Franchise Tax Act. The tax credit provided by this
section may be referred to as the "educational scholarship
corporate income tax credit".
B. The amount of the tax credit allowed by this
section shall be in an amount equal to the amount contributed
to a school tuition organization in a taxable year, not to
exceed one thousand four hundred dollars ($1,400); provided
that for the taxable year beginning January 1, 2026 and each
taxable year thereafter, the amount of credit shall be adjusted
to account for inflation. The department shall allow a tax
credit only for a contribution certified pursuant to Subsection
C of this section.
C. A taxpayer shall apply for certification of
eligibility for the tax credit allowed by this section from the
public education department on forms and in the manner
prescribed by that department. The application shall include
evidence of a contribution to a school tuition organization
made pursuant to Section 1 of this 2025 act.
D. A taxpayer may claim the tax credit allowed by
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this section for the taxable year in which the taxpayer makes a
contribution to a school tuition organization. To receive the
tax credit, a taxpayer shall apply to the department on forms
and in the manner prescribed by the department within twelve
months following the calendar year in which the contribution is
made. The application shall include a certification made
pursuant to Subsection C of this section.
E. That portion of the credit that exceeds a
taxpayer's tax liability in the taxable year in which the
credit is claimed shall not be refunded to the taxpayer but may
be carried forward for the following three consecutive taxable
years until the amount of the tax credit is exhausted.
F. A taxpayer allowed a tax credit pursuant to this
section shall report the amount of the tax credit to the
department in a manner required by that department.
G. 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."
SECTION 4. APPLICABILITY.--The provisions of Sections 2
and 3 of this act apply to taxable years beginning on or after
January 1, 2025.
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