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

RELATING TO TAXATION; PROVIDING AN INCOME TAX CREDIT FOR CONTRIBUTIONS MADE TO CERTAIN ORGANIZATIONS FOR TUITION SCHOLARSHIPS FOR CHILDREN FROM LOW-INCOME FAMILIES.

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] TUITION SCHOLARSHIP TAX CREDIT.--

A. A taxpayer who files an individual New Mexico income tax return and is not a dependent of another taxpayer may claim a credit for a contribution made to a school tuition organization if a receipt has been received from the organization certifying that the contribution will be used for educational scholarships or tuition grants for one or more children from low-income families. The credit may be claimed in an amount equal to the total contributions made during the taxable year for which the credit is claimed but shall not exceed five hundred dollars ($500) in any taxable year. The credit provided in this subsection shall be known as the "tuition scholarship tax credit".

B. The tuition scholarship tax credit shall not be allowed for a contribution that is designated by the taxpayer to benefit a particular individual or that is included in the taxpayer's itemized deductions, as defined in Section 63 of the Internal Revenue Code, for the taxable year.

C. 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 tuition scholarship tax credit that would have been allowed on a joint return.

D. The tuition scholarship tax credit provided in this section may only be deducted from the taxpayer's New Mexico income tax liability for the taxable year.

E. The department shall provide a format for a standardized receipt to be issued by a school tuition organization to indicate the tuition scholarship tax credit value of a contribution to the school tuition organization. The department may require a taxpayer claiming the tuition scholarship tax credit to submit a copy of the receipt with the taxpayer's claim for the credit.

F. As used in this section:

(1) "low-income family" means a family whose income is at or below one hundred eighty-five percent of the federal poverty guideline amount corresponding to a household of an equal number of persons as listed in the poverty guidelines published during the applicable year;

(2) "poverty guidelines" means the poverty guidelines published annually in the federal register by the United States department of health and human services;

(3) "qualified school" means an accredited nongovernmental elementary or secondary school in New Mexico;

(4) "school tuition organization" means an organization that:

(a) demonstrates to the department that it has been granted exemption from the federal income tax as an organization described in Section 501(c)(3) of the Internal Revenue Code;

(b) provides financial assistance for the education of children in the form of educational scholarships or tuition grants to students allowing them to attend any qualified school of their parents' choice; and

(c) expends one hundred percent of its tax-credit-qualifying revenues for educational scholarships or tuition grants for children of low-income families enrolled in a qualified school; and

(4) "tax-credit-qualifying revenue" means a contribution to a school tuition organization for which a receipt pursuant to Subsection E of this section has been issued by the organization to the donor of the contribution."

Section 2. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2002.