45th legislature - STATE OF NEW MEXICO - first session, 2001
RELATING TO TAXATION; PROVIDING INCOME TAX RELIEF BY ADDING ZERO BRACKETS, ADJUSTING OTHER BRACKET AMOUNTS AND REDUCING THE TOP MARGINAL RATE; INCREASING THE LOW-INCOME COMPREHENSIVE TAX REBATE; CHANGING CERTAIN FILING REQUIREMENTS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 7-2-2 NMSA 1978 (being Laws 1986, Chapter 20, Section 26, as amended) is amended to read:
"7-2-2. DEFINITIONS.--For the purpose of the Income Tax Act and unless the context requires otherwise:
A. "adjusted gross income" means adjusted gross income as defined in Section 62 of the Internal Revenue Code, as that section may be amended or renumbered;
B. "base income":
(1) means, for estates and trusts, that part of the estate's or trust's income defined as taxable income and upon which the federal income tax is calculated in the Internal Revenue Code for income tax purposes plus, for taxable years beginning on or after January 1, 1991, the amount of the net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code, as that section may be amended or renumbered, and taken by the taxpayer for that year;
(2) means, for taxpayers other than estates or trusts, that part of the taxpayer's income defined as adjusted gross income plus, for taxable years beginning on or after January 1, 1991, the amount of the net operating loss deduction allowed by Section 172(a) of the Internal Revenue Code, as that section may be amended or renumbered, and taken by the taxpayer for that year; and
(3) includes, for all taxpayers, any other income of the taxpayer not included in adjusted gross income but upon which a federal tax is calculated pursuant to the Internal Revenue Code for income tax purposes, except amounts for which a calculation of tax is made pursuant to Section 55 of the Internal Revenue Code, as that section may be amended or renumbered; "base income" also includes interest received on a state or local bond;
C. "compensation" means wages, salaries, commissions and any other form of remuneration paid to employees for personal services;
D. "department" means the taxation and revenue department, the secretary of taxation and revenue or any employee of the department exercising authority lawfully delegated to that employee by the secretary;
E. "fiduciary" means a guardian, trustee, executor, administrator, committee, conservator, receiver, individual or corporation acting in any fiduciary capacity;
F. "filing status" means "married filing joint returns", "married filing separate returns", "head of household", "surviving spouse" and "single", as those terms are generally defined for federal tax purposes;
G. "fiscal year" means any accounting period of twelve months ending on the last day of any month other than December;
H. "head of household" means "head of household" as generally defined for federal income tax purposes;
I. "individual" means a natural person, an estate, a trust or a fiduciary acting for a natural person, trust or estate;
J. "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended;
K. "lump-sum amount" means an amount that, for the purpose of determining liability for federal income tax, was not included in adjusted gross income but upon which the five-year-averaging or the ten-year-averaging method of tax computation provided in Section 402 of the Internal Revenue Code, as that section may be amended or renumbered, was applied;
L. "modified gross income" means all income of the taxpayer and, if any, the taxpayer's spouse and dependents, undiminished by losses and from whatever source derived, including:
(1) compensation;
(2) net profit derived from business;
(3) gains derived from dealings in property;
(4) interest;
(5) net rents;
(6) royalties;
(7) dividends;
(8) alimony and separate maintenance payments;
(9) annuities;
(10) income from life insurance and endowment contracts;
(11) pensions;
(12) discharge of indebtedness;
(13) distributive share of partnership income;
(14) income in respect of a decedent;
(15) income from an interest in an estate or trust;
(16) social security benefits;
(17) unemployment compensation benefits;
(18) workers' compensation benefits;
(19) public assistance and welfare benefits;
(20) cost-of-living allowances; and
(21) gifts;
M. "modified gross income" does not include:
(1) payments for hospital, dental, medical or drug expenses whether made to or on behalf of the taxpayer;
(2) the value of room and board provided by federal, state or local governments or by private individuals or agencies based upon financial need and not as a form of compensation;
(3) payments made pursuant to a federal, state or local government program directly or indirectly to a third party on behalf of the taxpayer when identified to a particular use or invoice by the payer; or
(4) payments made pursuant to Sections
7-2-14, [7-2-14.1] 7-2-18, 7-2-18.1 and 7-3-9 NMSA 1978;
N. "net income" means, for estates and trusts, base income adjusted to exclude amounts that the state is prohibited from taxing because of the laws or constitution of this state or the United States and means, for taxpayers other than estates or trusts, base income adjusted to exclude:
(1) an amount equal to the standard deduction allowed the taxpayer for the taxpayer's taxable year by Section 63 of the Internal Revenue Code, as that section may be amended or renumbered;
(2) an amount equal to the itemized deductions, as defined in Section 63 of the Internal Revenue Code, as that section may be amended or renumbered, allowed the taxpayer for the taxpayer's taxable year less the amount excluded pursuant to Paragraph (1) of this subsection;
(3) an amount equal to the product of the exemption amount allowed for the taxpayer's taxable year by Section 151 of the Internal Revenue Code, as that section may be amended or renumbered, multiplied by the number of personal exemptions allowed for federal income tax purposes;
(4) income from obligations of the United States of America less expenses incurred to earn that income;
(5) other amounts that the state is prohibited from taxing because of the laws or constitution of this state or the United States;
(6) for taxable years that began prior to January 1, 1991, an amount equal to the sum of:
(a) net operating loss carryback deductions to that year from taxable years beginning prior to January 1, 1991 claimed and allowed, as provided by the Internal Revenue Code; and
(b) net operating loss carryover deductions to that year claimed and allowed; and
(7) for taxable years beginning on or after January 1, 1991, an amount equal to the sum of any net operating loss carryover deductions to that year claimed and allowed, provided that the amount of any net operating loss carryover from a taxable year beginning on or after January 1, 1991 may be excluded only as follows:
(a) in the case of a timely filed return, in the taxable year immediately following the taxable year for which the return is filed; or
(b) in the case of amended returns or original returns not timely filed, in the first taxable year beginning after the date on which the return or amended return establishing the net operating loss is filed; and
(c) in either case, if the net operating loss carryover exceeds the amount of net income exclusive of the net operating loss carryover for the taxable year to which the exclusion first applies, in the next four succeeding taxable years in turn until the net operating loss carryover is exhausted; in no event shall a net operating loss carryover be excluded in any taxable year after the fourth taxable year beginning after the taxable year to which the exclusion first applies;
O. "net operating loss" means any net operating loss, as defined by Section 172(c) of the Internal Revenue Code, as that section may be amended or renumbered, for a taxable year as further increased by the income, if any, from obligations of the United States for that year less related expenses;
P. "net operating loss carryover" means the amount, or any portion of the amount, of a net operating loss for any taxable year that, pursuant to Paragraph (6) or (7) of Subsection N of this section, may be excluded from base income;
Q. "nonresident" means every individual not a resident of this state;
R. "person" means any individual, estate, trust, receiver, cooperative association, club, corporation, company, firm, partnership, limited liability company, joint venture, syndicate or other association; "person" also means, to the extent permitted by law, any federal, state or other governmental unit or subdivision or agency, department or instrumentality thereof;
S. "resident" means an individual who is domiciled in this state during any part of the taxable year; but any individual who, on or before the last day of the taxable year, changed his place of abode to a place without this state with the bona fide intention of continuing actually to abide permanently without this state is not a resident for the purposes of the Income Tax Act;
T. "secretary" means the secretary of taxation and revenue or the secretary's delegate;
U. "state" means any state of the United States, the District of Columbia, the commonwealth of Puerto Rico, any territory or possession of the United States or any political subdivision of a foreign country;
V. "state or local bond" means a bond issued by a state other than New Mexico or by a local government other than one of New Mexico's political subdivisions, the interest from which is excluded from income for federal income tax purposes under Section 103 of the Internal Revenue Code, as that section may be amended or renumbered;
W. "surviving spouse" means "surviving spouse" as generally defined for federal income tax purposes;
X. "taxable income" means net income less any lump-sum amount;
Y. "taxable year" means the calendar year or
fiscal year upon the basis of which the net income is computed
under the Income Tax Act and includes, in the case of the
return made for a fractional part of a year under the
provisions of the Income Tax Act, the period for which the
return is made; [and]
Z. "taxpayer" means any individual subject to the tax imposed by the Income Tax Act; and
AA. "zero bracket amount" means the maximum amount of taxable income in the first bracket of the tax rate table for a filing status, for which bracket the amount of tax due is zero."
Section 2. Section 7-2-7 NMSA 1978 (being Laws 1994, Chapter 5, Section 20, as amended) is amended to read:
"7-2-7. INDIVIDUAL INCOME TAX RATES.--The tax imposed by
Section 7-2-3 NMSA 1978 shall be at the following rates for
any taxable year beginning on or after January 1, [1998] 2001:
A. For married individuals filing separate returns:
If the taxable income is: The tax shall be:
[Not over $4,000 1.7% of taxable income
Over $ 4,000 but not over $ 8,000 $ 68.00 plus 3.2% of excess over $ 4,000
Over $ 8,000 but not over $ 12,000 $ 196 plus 4.7% of excess over $ 8,000
Over $ 12,000 but not over $ 20,000 $ 384 plus 6.0% of excess over $ 12,000
Over $ 20,000 but not over $ 32,000 $ 864 plus 7.1% of excess over $ 20,000
Over $ 32,000 but not over $ 50,000 $ 1,716 plus 7.9% of excess over $ 32,000
Over $ 50,000 $ 3,138 plus 8.2% of excess over $ 50,000]
Not over $1,600 $ 0
Over $ 1,600 but not over $ 4,000 1.7% of excess over
$1,600
Over $ 4,000 but not over $ 8,000 $ 40.80 plus 3.2% of
excess over $4,000
Over $ 8,000 but not over $ 12,000 $ 168.80 plus 4.7% of
excess over $8,000
Over $ 12,000 but not over $ 20,000 $ 356.80 plus 6.0% of
excess over $12,000
Over $ 20,000 but not over $ 40,000 $ 836.80 plus 7.1% of
excess over $20,000
Over $ 40,000 $2,256.80 plus 7.9% of excess over $40,000.
B. For surviving spouses and married individuals filing joint returns:
If the taxable income is: The tax shall be:
[Not over $8,000 1.7% of taxable income
Over $ 8,000 but not over $ 16,000 $ 136 plus 3.2% of excess over $ 8,000
Over $ 16,000 but not over $ 24,000 $ 392 plus 4.7% of excess over $ 16,000
Over $ 24,000 but not over $ 40,000 $ 768 plus 6.0% of excess over $ 24,000
Over $ 40,000 but not over $ 64,000 $ 1,728 plus 7.1% of excess over $ 40,000
Over $ 64,000 but not over $100,000 $ 3,432 plus 7.9% of excess over $ 64,000
Over $100,000 $ 6,276 plus 8.2% of
excess over $100,000]
Not over $3,200 $ 0
Over $ 3,200 but not over $ 8,000 1.7% of excess over
$3,200
Over $ 8,000 but not over $ 16,000 $ 81.60 plus 3.2% of
excess over $8,000
Over $ 16,000 but not over $ 24,000 $ 337.60 plus 4.7% of
excess over $16,000
Over $ 24,000 but not over $ 40,000 $ 713.60 plus 6.0% of
excess over $24,000
Over $ 40,000 but not over $ 80,000 $ 1,673.60 plus 7.1% of
excess over $40,000
Over $ 80,000 $ 4,513.60 plus 7.9% of excess over $80,000.
C. For single individuals and for estates and trusts:
If the taxable income is: The tax shall be:
[Not over $3,200 1.7% of taxable income
Over $ 3,200 but not over $ 11,000 $ 93.50 plus 3.2% of excess over $ 5,500
Over $ 11,000 but not over $ 16,000 $ 269.50 plus 4.7% of excess over $ 11,000
Over $ 16,000 but not over $ 26,000 $ 504.50 plus 6.0% of excess over $ 16,000
Over $ 26,000 but not over $ 42,000 $1,104.50 plus 7.1% of excess over $ 26,000
Over $ 42,000 but not over $ 65,000 $2,240.50 plus 7.9% of excess over $ 42,000
Over $ 65,000 $4,057.50 plus 8.2% of
excess over $ 65,000]
Not over $1,600 $ 0
Over $ 1,600 but not over $ 5,500 1.7% of excess over
$1,600
Over $ 5,500 but not over $ 11,000 $ 66.30 plus 3.2% of
excess over $5,500
Over $ 11,000 but not over $ 16,000 $ 242.30 plus 4.7% of
excess over $11,000
Over $ 16,000 but not over $ 26,000 $ 477.30 plus 6.0% of
excess over $16,000
Over $ 26,000 but not over $ 52,000 $1,077.30 plus 7.1% of
excess over $26,000
Over $ 52,000 $2,923.30 plus 7.9% of excess over $52,000.
D. For heads of household filing returns:
If the taxable income is: The tax shall be:
[Not over $7,000 1.7% of taxable income
Over $ 7,000 but not over $ 14,000 $ 119 plus 3.2% of
excess over $ 7,000
Over $ 14,000 but not over $ 20,000 $ 343 plus 4.7% of
excess over $ 14,000
Over $ 20,000 but not over $ 33,000 $ 625 plus 6.0% of
excess over $ 20,000
Over $ 33,000 but not over $ 53,000 $1,405 plus 7.1% of
excess over $ 33,000
Over $ 53,000 but not over $ 83,000 $2,825 plus 7.9% of
excess over $ 53,000
Over $83,000 $5,195 plus 8.2% of
excess over $ 83,000]
Not over $2,400 $ 0
Over $ 2,400 but not over $ 7,000 1.7% of excess over
$2,400
Over $ 7,000 but not over $ 14,000 $ 78.20 plus 3.2% of
excess over $7,000
Over $ 14,000 but not over $ 20,000 $ 302.20 plus 4.7% of
excess over $14,000
Over $ 20,000 but not over $ 33,000 $ 584.20 plus 6.0% of
excess over $20,000
Over $ 33,000 but not over $ 65,000 $1,364.20 plus 7.1% of
excess over $33,000
Over $ 65,000 $3,636.20 plus 7.9% of excess over $65,000.
E. The tax on the sum of any lump-sum amounts included in net income is an amount equal to five multiplied by the difference between:
(1) the amount of tax due on the taxpayer's taxable income; and
(2) the amount of tax that would be due on an amount equal to the taxpayer's taxable income and twenty percent of the taxpayer's lump-sum amounts included in net income."
Section 3. Section 7-2-12 NMSA 1978 (being Laws 1965, Chapter 202, Section 10, as amended) is amended to read:
"7-2-12. TAXPAYER RETURNS--PAYMENT OF TAX.--
A. Every resident of this state and every
individual deriving income from any business transaction,
property or employment within this state and not exempt from
tax under the Income Tax Act [who] shall file a complete tax
return with the department in form and content as prescribed
by the secretary if the individual:
(1) is required by the laws of the United
States to file a federal income tax return [shall file a
complete tax return with the department in form and content
as prescribed by the secretary] or files a federal income tax
return; and
(2) the taxpayer's taxable income exceeds the zero bracket amount for the taxpayer's filing status.
B. Unless otherwise required under the Income Tax Act or prescription of the secretary, in completing a return for a taxable year, the taxpayer shall declare the same filing status and number of personal exemptions as the taxpayer declared for federal income tax purposes for that same taxable year or, if the taxpayer was not required to file a federal income tax return for the taxable year, the filing status and number of personal exemptions that would have been required or allowed for that taxpayer by the Internal Revenue Code and regulations thereunder for the taxable year.
C. The return required and the tax imposed on individuals under the Income Tax Act are due and payment is required on or before the fifteenth day of the fourth month following the end of the taxable year."
Section 4. Section 7-2-14 NMSA 1978 (being Laws 1972, Chapter 20, Section 2, as amended) is amended to read:
"7-2-14. LOW-INCOME COMPREHENSIVE TAX REBATE.--
A. Except as otherwise provided in Subsection B of this section, any resident who files an individual New Mexico income tax return and who is not a dependent of another individual may claim a tax rebate for a portion of state and local taxes to which the resident has been subject during the taxable year for which the return is filed. The tax rebate may be claimed even though the resident has no income taxable under the Income Tax Act. A husband and wife who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the tax rebate that would have been allowed on a joint return.
B. No claim for the tax rebate provided in this section shall be filed by a resident who was an inmate of a public institution for more than six months during the taxable year for which the tax rebate could be claimed or who was not physically present in New Mexico for at least six months during the taxable year for which the tax rebate could be claimed.
C. For the purposes of this section, the total number of exemptions for which a tax rebate may be claimed or allowed is determined by adding the number of federal exemptions allowable for federal income tax purposes for each individual included in the return who is domiciled in New Mexico plus two additional exemptions for each individual domiciled in New Mexico included in the return who is sixty-five years of age or older plus one additional exemption for each individual domiciled in New Mexico included in the return who, for federal income tax purposes, is blind plus one exemption for each minor child or stepchild of the resident who would be a dependent for federal income tax purposes if the public assistance contributing to the support of the child or stepchild was considered to have been contributed by the resident.
D. The tax rebate provided for in this section may be claimed in the amount shown in the following table:
Modified gross And the total number
income is: of exemptions is:
But Not 6 or
Over Over 1 2 3 4 5 More
[$ 0 $ 500 $ 120 $ 160 $ 200 $ 240 $ 280 $ 320
500 1,000 135 195 250 310 350 415
1,000 1,500 135 195 250 310 350 435
1,500 2,000 135 195 250 310 350 450
2,000 2,500 135 195 250 310 350 450
2,500 3,000 135 195 250 310 350 450
3,000 3,500 135 195 250 310 350 450
3,500 4,000 135 195 250 310 355 450
4,000 4,500 135 195 250 310 355 450
4,500 5,000 125 190 240 305 355 450
5,000 5,500 115 175 230 295 355 430
5,500 6,000 105 155 210 260 315 410
6,000 7,000 90 130 170 220 275 370
7,000 8,000 80 115 145 180 225 295
8,000 9,000 70 105 135 170 195 240
9,000 10,000 65 95 115 145 175 205
10,000 11,000 60 80 100 130 155 185
11,000 12,000 55 70 90 110 135 160
12,000 13,000 50 65 85 100 115 140
13,000 14,000 50 65 85 100 115 140
14,000 15,000 45 60 75 90 105 120
15,000 16,000 40 55 70 85 95 110
16,000 17,000 35 50 65 80 85 105
17,000 18,000 30 45 60 70 80 95
18,000 19,000 25 35 50 60 70 80
19,000 20,000 20 30 40 50 60 65
20,000 21,000 15 25 30 40 50 55
21,000 22,000 10 20 25 35 40 45]
$ 0 $500 $144 $192 $240 $288 $336 $384
500 1,000 162 234 300 372 420 498
1,000 1,500 162 234 300 372 420 522
1,500 2,000 162 234 300 372 420 540
2,000 2,500 162 234 300 372 420 540
2,500 3,000 162 234 300 372 420 540
3,000 3,500 162 234 300 372 420 540
3,500 4,000 162 234 300 372 426 540
4,000 4,500 162 234 300 372 426 540
4,500 5,000 150 228 288 366 426 540
5,000 5,500 138 210 276 354 426 516
5,500 6,000 126 186 252 312 378 492
6,000 7,000 108 156 204 264 330 444
7,000 8,000 96 138 174 216 270 354
8,000 9,000 84 126 162 204 234 288
9,000 10,000 78 114 138 174 210 246
10,000 11,000 72 96 120 156 186 222
11,000 12,000 66 84 108 132 162 192
12,000 13,000 60 78 102 120 138 168
13,000 14,000 60 78 102 120 138 168
14,000 15,000 54 72 90 108 126 144
15,000 16,000 48 66 84 102 114 132
16,000 17,000 42 60 78 96 102 126
17,000 18,000 36 54 72 84 96 114
18,000 19,000 30 42 60 72 84 96
19,000 20,000 24 36 48 60 72 78
20,000 21,000 18 30 36 48 60 66
21,000 22,000 12 24 30 42 48 54.
E. If a taxpayer's modified gross income is zero, the taxpayer may claim a credit in the amount shown in the first row of the table appropriate for the taxpayer's number of exemptions.
F. The tax rebates provided for in this section may be deducted from the taxpayer's New Mexico income tax liability for the taxable year. If the tax rebates exceed the taxpayer's income tax liability, the excess shall be refunded to the taxpayer.
G. For purposes of this section, "dependent" means "dependent" as defined by Section 152 of the Internal Revenue Code of 1986, as that section may be amended or renumbered, but also includes any minor child or stepchild of the resident who would be a dependent for federal income tax purposes if the public assistance contributing to the support of the child or stepchild was considered to have been contributed by the resident."
Section 5. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2001.