This bill proposes a comprehensive overhaul of the taxation framework in New Mexico by repealing the existing Working Families Tax Credit and introducing a new Earned Income Tax Credit (EITC). The EITC will allow eligible individuals to claim a credit against their tax liability based on their earned income, with specific percentages and phaseout amounts determined by the number of qualifying children. Additionally, a new Foster Parent and Guardian Income Tax Credit is established, providing a credit of $250 per month for each month a taxpayer serves as a foster parent or guardian, with a maximum annual credit of $3,000. The bill also includes provisions for inflation adjustments to the EITC amounts starting in 2026 and mandates that the credits and deductions be included in the tax expenditure budget for transparency.

Furthermore, the bill amends the liquor excise tax structure by establishing new tax rates based on the alcohol content of beverages sold, with specific rates for different alcohol volumes. It also creates the "tribal alcohol harms alleviation fund" to support alcohol harm prevention and treatment services on Indian lands, funded through various sources. The bill outlines the distribution of liquor excise tax revenues to local DWI grant funds, drug court funds, and the new tribal fund. The provisions will take effect on various dates, with some applicable to taxable years starting January 1, 2026, and others effective July 1, 2025, while a delayed repeal is set for January 1, 2031.

Statutes affected:
introduced version: 7-2-18.15
TR substitute: 7-1-10, 7-31-2, 7-31-4, 7-31-7, 7-31-8, 7-31-26, 7-2-18.15
Final Version: 7-2-18.15, 7-9-93, 7-17-5, 7-1-6.40