HOUSE BILL 325

57th legislature - STATE OF NEW MEXICO - first session, 2025

INTRODUCED BY

Gail Armstrong and Mark Duncan and Mark B. Murphy

and Rebecca Dow and Joshua N. Hernandez

 

 

 

 

AN ACT

RELATING TO TAXATION; CREATING GROSS RECEIPTS TAX DEDUCTIONS FOR SELLING LABOR INCURRED DURING THE CONSTRUCTION OF NEW RESIDENTIAL HOUSING AND FOR SALES OF RESIDENTIAL HOUSING; CREATING A HOLD HARMLESS DISTRIBUTION TO MUNICIPALITIES AND COUNTIES.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new section of the Tax Administration Act is enacted to read:

     "[NEW MATERIAL] DISTRIBUTION TO HOLD HARMLESS MUNICIPALITIES AND COUNTIES FROM GROSS RECEIPTS TAX DEDUCTIONS FOR SELLING LABOR INCURRED DURING THE CONSTRUCTION OF NEW RESIDENTIAL HOUSING AND FOR SALES OF RESIDENTIAL HOUSING.--

          A. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to a municipality in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the total deductions claimed pursuant to Sections 2 and 3 of this 2025 act for the month by taxpayers from business locations in the municipality multiplied by the sum of the combined rate of all municipal local option gross receipts taxes in effect in the municipality for the month plus one and two hundred twenty-five thousandths percent.

          B. A distribution pursuant to Section 7-1-6.1 NMSA 1978 shall be made to a county in an amount, subject to any increase or decrease made pursuant to Section 7-1-6.15 NMSA 1978, equal to the total deductions claimed pursuant to Sections 2 and 3 of this 2025 act for the month by taxpayers from business locations:

                (1) within a municipality in the county multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed throughout the county; and

                (2) in the county but not within a municipality multiplied by the combined rate of all county local option gross receipts taxes in effect for the month that are imposed in the county area not within a municipality."

     SECTION 2. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

     "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS--SELLING LABOR INCURRED DURING THE CONSTRUCTION OF CERTAIN NEW RESIDENTIAL HOUSING.--

          A. Except as provided in Subsection B of this section, receipts from selling labor incurred during the construction of new residential housing may be deducted from gross receipts.

          B. Receipts shall not be deducted pursuant to this section if any receipt of the taxpayer is deducted pursuant to Section 3 of this 2025 act during the twelve-month period described in that section.

          C. A taxpayer allowed a deduction pursuant to this section shall report the amount of the deduction separately in a manner required by the department.

          D. A taxpayer shall not claim a deduction pursuant to this section and a deduction pursuant to Section 3 of this 2025 act.

          E. The deduction provided by this section shall be

included in the tax expenditure budget pursuant to Section

7-1-84 NMSA 1978, including the total annual aggregate cost of the deduction.

          F. As used in this section, "residential housing" means residential property that is a single-family residence, a town house, a condominium or an apartment building."

     SECTION 3. A new section of the Gross Receipts and Compensating Tax Act is enacted to read:

     "[NEW MATERIAL] DEDUCTION--GROSS RECEIPTS--CERTAIN NEW RESIDENTIAL HOUSING.--

          A. Except as provided in Subsection B of this section, a taxpayer may deduct from gross receipts up to:

                (1) one hundred twenty-five thousand dollars ($125,000) during any twelve-month period from the sale of new residential housing; and

                (2) seventy-five thousand dollars ($75,000) during any twelve-month period from the sale of new residential housing that is intended for lease.

          B. Receipts shall not be deducted pursuant to this section if:

                (1) the receipt is for a sale related to

renovation or remodeling; or

                (2) during the twelve-month period, any receipt of the taxpayer is deducted pursuant to Section 2 of this 2025 act.

          C. A taxpayer allowed a deduction pursuant to this section shall report the amount of the deduction separately in a manner required by the department.

          D. A taxpayer shall not claim a deduction pursuant to this section and a deduction pursuant to Section 2 of this 2025 act.

          E. The deductions provided by this section shall be included in the tax expenditure budget pursuant to Section 7-1-84 NMSA 1978, including the total annual aggregate cost of the deductions.

          F. As used in this section, "residential housing" means residential property that is a single-family residence, a town house, a condominium or an apartment building."

     SECTION 4. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2025.

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