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HOUSE BILL 325
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
Gail Armstrong and Mark Duncan and Mark B. Murphy
and Rebecca Dow and Joshua N. Hernandez
AN ACT
RELATING TO TAXATION; CREATING GROSS RECEIPTS TAX DEDUCTIONS
FOR SELLING LABOR INCURRED DURING THE CONSTRUCTION OF NEW
RESIDENTIAL HOUSING AND FOR SALES OF RESIDENTIAL HOUSING;
CREATING A HOLD HARMLESS DISTRIBUTION TO MUNICIPALITIES AND
COUNTIES.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. A new section of the Tax Administration Act is
enacted to read:
"[NEW MATERIAL] DISTRIBUTION TO HOLD HARMLESS
MUNICIPALITIES AND COUNTIES FROM GROSS RECEIPTS TAX DEDUCTIONS
FOR SELLING LABOR INCURRED DURING THE CONSTRUCTION OF NEW
RESIDENTIAL HOUSING AND FOR SALES OF RESIDENTIAL HOUSING.--
A. A distribution pursuant to Section 7-1-6.1 NMSA
1978 shall be made to a municipality in an amount, subject to
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any increase or decrease made pursuant to Section 7-1-6.15 NMSA
1978, equal to the total deductions claimed pursuant to
Sections 2 and 3 of this 2025 act for the month by taxpayers
from business locations in the municipality multiplied by the
sum of the combined rate of all municipal local option gross
receipts taxes in effect in the municipality for the month plus
one and two hundred twenty-five thousandths percent.
B. A distribution pursuant to Section 7-1-6.1 NMSA
1978 shall be made to a county in an amount, subject to any
increase or decrease made pursuant to Section 7-1-6.15 NMSA
1978, equal to the total deductions claimed pursuant to
Sections 2 and 3 of this 2025 act for the month by taxpayers
from business locations:
(1) within a municipality in the county
multiplied by the combined rate of all county local option
gross receipts taxes in effect for the month that are imposed
throughout the county; and
(2) in the county but not within a
municipality multiplied by the combined rate of all county
local option gross receipts taxes in effect for the month that
are imposed in the county area not within a municipality."
SECTION 2. A new section of the Gross Receipts and
Compensating Tax Act is enacted to read:
"[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS--SELLING LABOR
INCURRED DURING THE CONSTRUCTION OF CERTAIN NEW RESIDENTIAL
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HOUSING.--
A. Except as provided in Subsection B of this
section, receipts from selling labor incurred during the
construction of new residential housing may be deducted from
gross receipts.
B. Receipts shall not be deducted pursuant to this
section if any receipt of the taxpayer is deducted pursuant to
Section 3 of this 2025 act during the twelve-month period
described in that section.
C. A taxpayer allowed a deduction pursuant to this
section shall report the amount of the deduction separately in
a manner required by the department.
D. A taxpayer shall not claim a deduction pursuant
to this section and a deduction pursuant to Section 3 of this
2025 act.
E. The deduction 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 deduction.
F. As used in this section, "residential housing"
means residential property that is a single-family residence, a
town house, a condominium or an apartment building."
SECTION 3. A new section of the Gross Receipts and
Compensating Tax Act is enacted to read:
"[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS--CERTAIN NEW
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RESIDENTIAL HOUSING.--
A. Except as provided in Subsection B of this
section, a taxpayer may deduct from gross receipts up to:
(1) one hundred twenty-five thousand dollars
($125,000) during any twelve-month period from the sale of new
residential housing; and
(2) seventy-five thousand dollars ($75,000)
during any twelve-month period from the sale of new residential
housing that is intended for lease.
B. Receipts shall not be deducted pursuant to this
section if:
(1) the receipt is for a sale related to
renovation or remodeling; or
(2) during the twelve-month period, any
receipt of the taxpayer is deducted pursuant to Section 2 of
this 2025 act.
C. A taxpayer allowed a deduction pursuant to this
section shall report the amount of the deduction separately in
a manner required by the department.
D. A taxpayer shall not claim a deduction pursuant
to this section and a deduction pursuant to Section 2 of this
2025 act.
E. The deductions 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
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the deductions.
F. As used in this section, "residential housing"
means residential property that is a single-family residence, a
town house, a condominium or an apartment building."
SECTION 4. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2025.
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