The flood of “more money than they know what to do with” into the New Mexico budget set the stage for unprecedented government spending growth. And, that definitely happened with the budget growing by more than $1,000,000,000 in a single year.
But, it’s an election year and the Democrats who control the Legislature know that New Mexicans are feeling the pinch from high inflation (including the very gas prices that are fueling New Mexico’s spending growth). So, we got modest tax cuts this year totaling approximately $400 million in the form of HB 163.
While annual spending growth more than doubled the “cost” of tax cuts, there are some good tax reductions in this legislation. Here are the reductions. We’ve bolded the BEST reductions. Alas, the GRT reduction goes away if revenues drop by 5% or more from current, inflated levels.
The session did not eliminate the Social Security tax. True gross receipts tax reform in the form of eliminating taxes on business service inputs was not accomplished either, but there were some worthwhile tax cuts enacted this session.
|Approximate Annual revenue impact||Description of Tax Cuts Enacted|
|$74,000,000||Child Credit of $25 to $175 per child|
|$9,350,000||$1,000 nurse tax credit (one year only)|
|$15,000,000||Military pensions (phased in over three years)|
|$85,000,000||Social Security tax exemption $100K for single, $150K for married|
|$200,000,000||Reduces GRT from 5.125 to 4.875 unless revenues are reduced by 5% of more|
|$5,600,000||Provides GRT deducations on business inputs for manufacturers|
|$1,500,000||Eliminates GRT on feminine hygiene products|
|Total annual tax cut approximately ($400,000,000)|