Tax Fairness Bill Unanimously Passes Senate
Expands proven poverty-reduction policies, providing relief to low-income families
Santa Fe, N.M. - Tax reform legislation providing relief to low-income New Mexicans and stimulating our economy passed the Senate unanimously today with an 40-0 vote. The bill will now return to the House for concurrence with the Senate amendments, and then make its way to the Governor’s desk to be signed into law.
Sponsored by Representatives Javier Martínez (D-Albuquerque), Christine Chandler (D-Los Alamos), and Matthew McQueen (D-Galisteo), HB 291 expands two proven poverty-reduction programs in the state: the Working Families Tax Credit (WFTC) and the Low Income Comprehensive Tax Rebate (LICTR). Amendments in the Senate included increasing the WFTC from 20% to 25%, and adding a one-year delayed implementation for the program.
“New Mexico’s tax code historically has not worked for New Mexico’s families,” said Rep. Martínez.
“House Bill 291 takes important steps to right this wrong, implementing policies proven to help working families. This $100 million tax relief bill will uplift families across New Mexico. I’m proud of the work of this legislature to put New Mexico’s working families first!”
“For New Mexico to truly thrive, we must help families rise out of poverty, and we know that the Low Income Comprehensive Tax Rebate and Working Families Tax Credit do just that,” said Rep. Chandler. “By making overdue updates to these policies to account for today’s realities and cost of living, HB 291 will allow hardworking families to keep more of their hard-earned dollars, supporting their families and stimulating the economy.”
“We still have a long way to go to create a tax system that’s truly fair for all New Mexicans, but HB 291 takes an important step in the right direction,” said Rep. McQueen. “When working families keep a greater share of their hard-earned tax dollars, they invest that money back into their local economies, providing support that our businesses desperately needed a year into a global pandemic.”
The Working Families Tax Credit (WFTC) is the state-level companion to the federal Earned Income Tax Credit (EITC), a tax credit for low-income workers that 1 in 4 New Mexicans receive. HB 291 raises New Mexico’s WFTC from 17% of the EITC to 25% after a one-year delayed implementation. In New Mexico, tax filers typically only claim the WFTC for one or two years as they advance in the workplace and earn a higher income. Roughly 97% of those who receive the credit have children, making the program one of the most effective methods to reduce child poverty.
Similarly, LICTR provides crucial support to those who need it most, especially for low-income seniors who are able to claim additional tax exemptions through the policy. LICTR was designed to offset the regressive impact of the Gross Receipts Tax, however it has not been adjusted to the cost of living in over two decades. HB 291 resets LICTR to the current cost of living, raising the qualifying income level from $22,000 to $37,000 annually.
An overview of the amended HB 291’s main provisions is as follows:
- Increases the Working Families Tax Credit (WFTC) from 17% to 25% of the federal Earned Income Tax Credit with a one-year delayed implementation. - Ends current exclusions from the WFTC for tax filers who use ITINs and for workers 18-24 years old.
- Expands the Low Income Comprehensive Tax Rebate (LICTR). - Sets LICTR to the current costof living, allowing those who earn $37,000 or less a year to qualify. LICTR has been stagnant since 1998, even as the cost of living has increased. - This would mean that many more New Mexicans would have access to relief at a time when so many are struggling to afford basic necessities.
Members of the public can track legislation on the New Mexico Legislature website, access committee meetings and House floor sessions via the Webcasts tab, or participate by Zoom to provide public comment on committee hearings. During the 2021 Legislative Session, the House of Representatives is focused on passing critical legislation while protecting the health and safety of the public, the staff, and the legislators.