This bill proposes the repeal of the Working Families Tax Credit and the enactment of a new Earned Income Tax Credit (EITC) in New Mexico. The new EITC will allow eligible individuals to claim a tax credit against their tax liability based on their earned income, with specific percentages and phaseout amounts determined by the number of qualifying children. The bill outlines the credit percentages, phaseout percentages, and income thresholds for taxpayers with varying numbers of qualifying children, as well as provisions for married individuals filing jointly. Additionally, the bill includes a mechanism for adjusting the earned income and phaseout amounts for inflation starting in the 2026 taxable year.

The legislation also stipulates that any portion of the credit exceeding a taxpayer's tax liability will be refunded, and such refunds will not be treated as income. Taxpayers claiming the credit must report it to the department, which will include the credit in the tax expenditure budget. The definitions of "earned income," "eligible individual," "federal earned income tax credit," and "qualifying child" are provided to clarify eligibility criteria. The provisions of this act will take effect for taxable years beginning on or after January 1, 2025.

Statutes affected:
introduced version: 7-2-18.15