The tax omnibus bill has dropped and it’s a dud, but left EV credits and alcohol taxes out

We’ve been waiting for the tax committees in the Legislature to come together and here it is. We’re working on a more in-depth analysis (for purposes of our Freedom Index), but here are some of the top-line items relating to the bill:

Income tax brackets (not rates) are adjusted in a way that is a slight tax cut. We analyze the concept here. It amounts to good, not great tax policy especially at a time of massive budget surpluses. This is a tax cut. 

Capital gains tax deduction is limited. If adopted it would dramatically limit New Mexicans’ ability to deduct capital gains from the sale of homes, businesses, and stock. The concept was analyzed here. This is a tax hike.

A slight increase in NM’s corporate income tax by removing the lower rate. This concept was introduced in 2023 and we discussed it here. This is a tax hike. 

Other relevant policies included in the bill include: single sales factor, a tax deduction for energy storage, a rural health practitioner tax credit, and extension of the duration of the Angel Investor Tax Credit (to name a few of the big ones).

You can find a detailed analysis of the various provisions in the tax bill here.

Some proposals that DID not make it into the bill included EV tax credits (as outlined in HB 140) and tax hikes on alcohol. We’re glad about that.

On the other hand, the capital gains and corporate tax hikes hold the bill back from being a worthwhile bill.

Thanks to Curtis Segarra of KRQE 13 for the graphic.