45th legislature - STATE OF NEW MEXICO - second session, 2002

RELATING TO TAXATION; PROVIDING AN INCOME TAX CREDIT FOR CERTAIN CHILD AND DEPENDENT CARE EXPENSES.

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

Section 1. A new section of the Income Tax Act is enacted to read:

"[NEW MATERIAL] CREDIT FOR CHILD AND DEPENDENT CARE EXPENSES.--

A. A taxpayer who files an individual New Mexico income tax return, who is not a dependent of another individual, who is eligible to claim a credit pursuant to 26 U.S.C. Section 21 and who is otherwise eligible pursuant to this section may take a tax credit for certain child and dependent care expenses.

B. The amount of the tax credit shall equal the base credit reduced by eighty-three hundredths of one percent of the base credit for each one hundred dollars ($100) or fraction thereof that the taxpayer's adjusted gross income exceeds the threshold income.

C. No taxpayer may take a credit pursuant to this section if the taxpayer is eligible for child care assistance pursuant to the New Mexico Works Act and has failed to accept the assistance available under that act.

D. The tax credit provided for in this section may be deducted from the taxpayer's income tax liability for the taxable year. If the credit exceeds the taxpayer's income tax liability, the excess shall be refunded to the taxpayer.

E. As used in this section:

(1) "base credit" means the product of the federal income tax credit allowed the taxpayer for the taxable year pursuant to 26 U.S.C. Section 21 multiplied by a fraction, the numerator of which is the annual consumer price index for the calendar year preceding the beginning of the taxable year and the denominator of which is the annual consumer price index for the calendar year 2001; provided that, if 26 U.S.C. Section 21 is amended to increase the amount of the employment-related expenses incurred during any taxable year that may be taken into account pursuant to that section, then the denominator shall equal the annual consumer price index for the calendar year preceding the effective date of the increased amount;

(2) "consumer price index" means the consumer price index for all urban consumers computed and published by the United States bureau of labor statistics; and

(3) "threshold income" means the product of thirty-two thousand dollars ($32,000) multiplied by a fraction, the numerator of which is the annual consumer price index for the calendar year preceding the beginning of the taxable year and the denominator of which is the annual consumer price index for the calendar year 2001."

Section 2. REPEAL.--Section 7-2-18.1 NMSA 1978 (being Laws 1981, Chapter 170, Section 1, as amended) is repealed.

Section 3. APPLICABILITY.--The provisions of this act are applicable to taxable years beginning on or after January 1, 2002.