This bill proposes the establishment of a flat individual income tax rate of zero percent for residents of New Mexico, effective for taxable years beginning on or after January 1, 2026. The current tax structure, which includes various rates based on income brackets, will be eliminated. Specifically, the language detailing the previous tax rates and brackets for married individuals, single individuals, and married individuals filing separately will be removed from the law.

Additionally, the bill modifies the requirements for filing personal income tax returns. While individuals who are required to file a federal income tax return may choose to file a state return, it is no longer mandatory. The new provisions state that residents and individuals deriving income from business transactions, property, or employment within the state may file a return if they wish, but they are not obligated to do so unless they elect to file. The effective date for these changes is also set for January 1, 2026.

Statutes affected:
introduced version: 7-2-7, 7-2-12