The bill establishes a requirement for the state of New Mexico to make annual payments in lieu of taxes to political subdivisions when it acquires real property, either through purchase or eminent domain. These payments will begin in the calendar year following the acquisition and will continue as long as the state retains ownership of the property. A state agency must inquire about the annual property tax liability prior to acquisition and remit an equivalent amount to the state treasurer for deposit into a newly created "payments in lieu of taxes fund." This fund will be administered by the taxation and revenue department and will consist of various sources of income, including appropriations and donations.

Additionally, the bill exempts the Department of Transportation from these payment requirements when acquiring property for public roadways or highways. The taxation and revenue department is tasked with creating rules to adjust the payments based on changes in property values and tax rates. The provisions of this act will take effect on July 1, 2025.