This bill proposes a new section to the Income Tax Act in New Mexico that exempts tips received by residents from being included in their taxable income. Specifically, it allows residents who receive tips as compensation for services or as part of their wages to claim an exemption for the amount of tips received, thereby reducing their net income for tax purposes.

The provisions of this act will take effect for taxable years starting on or after January 1, 2025. This change aims to provide financial relief to individuals who rely on tips as a significant part of their income, ensuring that they are not taxed on these earnings.