This bill introduces new gross receipts tax deductions for labor incurred during the construction of new residential housing and for the sale of residential housing in New Mexico. Specifically, it allows taxpayers to deduct receipts from selling labor related to the construction of new residential housing, with certain conditions outlined. Additionally, taxpayers can deduct up to $125,000 from gross receipts for the sale of new residential housing and up to $75,000 for housing intended for lease during any twelve-month period. However, deductions are not permitted if the receipts are related to renovation or remodeling, or if the taxpayer has claimed deductions under the other sections of the bill within the same twelve-month period.

Furthermore, the bill establishes a hold harmless distribution to municipalities and counties to offset the impact of these gross receipts tax deductions. This distribution will be calculated based on the total deductions claimed by taxpayers in each municipality and county, ensuring that local governments are compensated for potential revenue losses. The effective date for the provisions of this act is set for July 1, 2025.