The bill proposes a significant change to the individual income tax structure in New Mexico by establishing a flat income tax rate of zero percent for all taxable years beginning on or after January 1, 2026. This amendment replaces the existing tiered tax rates that currently apply to various income brackets, effectively eliminating personal income tax for residents. The bill also stipulates that while personal income tax returns are not required, individuals may choose to file them if they wish.

Additionally, the bill modifies the language regarding taxpayer returns, allowing residents and individuals deriving income within the state to file a tax return only if they are required to do so by federal law. This change emphasizes the optional nature of filing a state tax return under the new zero percent tax rate. The provisions of the act will take effect on January 1, 2026, aligning with the implementation of the new tax rate.

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