Social Security tax bills in limbo as session goes into the home stretches
Social Security tax bills in limbo as session goes into the home stretches

Social Security tax bills in limbo as session goes into the home stretches

Several proposals to exempt social security pensions from taxation in New Mexico remain under consideration as lawmakers enter the final week of this year’s 30-day legislative session. (Eddie Moore / Journal)

Copyright © 2022 Albuquerque Journal

SANTA FE – A push from Gov. Michelle Lujan Grisham and a two-part mix of lawmakers to exempt Social Security retirement income from taxation in New Mexico continues to fight for a firm foothold in the Roundhouse.

Several House Democrats expressed concern over two GOP-backed bills on the issue on Wednesday, although no vote was taken on whether one of the proposals would end up being included in a tax package that is still under development.

House Majority Leader Javier Martinez, D-Albuquerque, cited recent changes in tax law that have benefited low-income seniors in New Mexico, saying exemption from social security benefits from taxation would primarily help wealthier citizens.

“I do not think people who are retired and relatively affluent need a break,” Martinez said during a meeting of the House Taxation and Revenue Committee.

Of the two bills discussed Wednesday, one of them, House Bill 48, would pass the new tax cut from next year. The second proposal, House Bill 49, would gradually phase in the new exemption over a four-year period.

They are among a total of five bills addressing the issue that has been tabled during this year’s 30-day legislative session, which ends on 17 February.

New Mexico’s personal income tax was not levied on social security benefits until the early 1990s, when a provision buried in a tax bill triggered the change.

Reintroducing the exemption will cost the state an estimated $ 118.1 million in lost revenue in the coming fiscal year, according to a legislative analysis of the bill.

Critics say money could be better spent on other tax initiatives, as New Mexico’s personal income tax is currently only levied on income above $ 24,800 annually for a married couple applying jointly.

But rep. Cathrynn Brown, R-Carlsbad, one of the sponsors of the bill, said that inflation has put extra pressure on older new Mexicans and that the tax exemption has not been adjusted upwards accordingly.

“Clearly, the level of tax exemption has not kept pace with the realities of life,” Brown said.

Several cabinet secretaries in the Lujan Grisham administration have also testified in support of the idea of ​​exempting social security pensions from taxation.

“We need this bill, and I do not think seniors want to be told whether they have enough money or not,” Aging and Long-Term Services Secretary Katrina Hotrum-Lopez said Wednesday.

A $ 8.5 billion budget-approved budget plan leaves about $ 400 million available for changes to the tax code during this year’s session.

Other proposals that will be included in the tax package that could move out of Parliament’s committees this week include a reduction in the state’s gross income tax base and $ 300 tax rebates for low-income citizens.

Lujan Grisham told reporters on Wednesday that she is convinced that the tax package will ultimately include both social security and gross tax proposals.

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