AN ACT
RELATING TO TAXATION; REDUCING INCOME
TAX RATES; EXPANDING THE CAPITAL GAINS DEDUCTION; CHANGING REQUIREMENTS FOR
PAYMENT OF INTEREST ON CERTAIN REFUNDS.
BE IT ENACTED BY THE LEGISLATURE OF
THE STATE OF NEW MEXICO:
Section 1. Section 7-1-68 NMSA 1978 (being Laws 1965,
Chapter 248, Section 69, as amended) is amended to read:
"7-1-68. INTEREST ON OVERPAYMENTS.--
A. As provided in this section, interest shall
be allowed and paid on the amount of tax overpaid by a person that is
subsequently refunded or credited to that person.
B. Interest payable on overpayments of tax shall
be paid at the rate of fifteen percent a year, computed on a daily basis;
provided that if a different rate is specified by a compact or other interstate
agreement to which New Mexico is a party, that rate shall be applied to amounts
due under the compact or other agreement.
C. Unless otherwise provided by this section,
interest on an overpayment not arising from an assessment by the department
shall be paid from the date the claim for refund was made until a date
preceding by not more than thirty days the date on which the amount thereof is
credited or refunded to any person; interest on an overpayment arising from an
assessment by the department shall be paid from the date overpayment was made
until a date preceding by not more than thirty days the date on which the
amount thereof is credited or refunded to any person.
D. No interest shall be allowed or paid with
respect to an amount credited or refunded if:
(1) the amount of interest due is less than one
dollar ($1.00);
(2) the credit or refund is made within:
(a) fifty-five days of the date of the claim for
refund of income tax, pursuant to either the Income Tax Act or the Corporate
Income and Franchise Tax Act for the tax year immediately preceding the tax
year in which the claim is made; or
(b) seventy-five days of the date of the claim
for refund of gasoline tax to users of gasoline off the highways;
(3) the credit or refund is made within one
hundred twenty days of the date of the claim for refund of income tax, pursuant
to the Income Tax Act or the Corporate Income and Franchise Tax Act, for any
tax year more than one year prior to the year in which the claim is made;
(4) Sections 6611(f) and 6611(g) of the Internal
Revenue Code, as those sections may be amended or renumbered, prohibit payment
of interest for federal income tax purposes;
(5) the credit or refund is made within sixty
days of the date of the claim for refund of any tax other than income tax; or
(6) the credit results from overpayments found in
an audit of multiple reporting periods and applied to underpayments found in
that audit or refunded as a net overpayment to the taxpayer pursuant to Section
7-1-29 NMSA 1978.
E. Nothing in this section shall be construed to
require the payment of interest upon interest."
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 in 2003:
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 $ 1,716 plus 7.7% of
excess over $ 32,000.
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 $ 3,432 plus 7.7%
ofexcess over $ 64,000.
C.
For single individuals and for estates and trusts:
If the taxable income is: The tax shall be:
Not over $5,500 1.7% of taxable income
Over $
5,500 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 $2,240.50 plus 7.7% of
excess over $ 42,000.
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 $2,825 plus 7.7% of
excess
over $ 53,000.
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 7-2-7 NMSA 1978 (being Laws 1994,
Chapter 5, Section 20, as amended and as further amended by Section 2 of this
act) is repealed and a new Section 7-2-7 NMSA 1978 is enacted 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 in 2004:
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 $ 864 plus 6.8% of
excess over $ 20,000.
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 $ 1,728 plus 6.8% of
excess over $ 40,000.
C.
For single individuals and for estates and trusts:
If the taxable income is: The tax shall be:
Not over $5,500 1.7% of
taxable income
Over $
5,500 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 $1,104.50 plus 6.8%
of
excess over $ 26,000.
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 $1,405 plus 6.8% of
excess
over $ 33,000.
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 4. Section 7-2-7 NMSA 1978 (being Section 3 of
this act if it becomes law) is repealed and a new
Section 7-2-7 NMSA 1978 is enacted 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 in 2005:
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 $ 384 plus 6.0% of excess over $ 12,000.
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 $ 768 plus 6.0% of excess over $ 24,000.
C.
For single individuals and for estates and trusts:
If the taxable income is: The tax shall be:
Not over $5,500 1.7% of
taxable income
Over $
5,500 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 $ 504.50 plus 6.0% of excess over $ 16,000.
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 $ 625 plus 6.0% of
excess
over $ 20,000.
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 5. Section 7-2-7 NMSA 1978 (being Section 4 of
this act if it becomes law) is repealed and a new
Section 7-2-7 NMSA 1978 is enacted 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 in 2006:
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 $ 384 plus 5.3% of excess over $ 12,000.
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 $ 768 plus 5.3% of excess over $ 24,000.
C.
For single individuals and for estates and trusts:
If the taxable income is: The tax shall be:
Not over $5,500 1.7% of
taxable income
Over $
5,500 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 $ 504.50 plus 5.3% of excess over $ 16,000.
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 $ 625 plus 5.3% of
excess
over $ 20,000.
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 6. Section 7-2-7 NMSA 1978 (being Section 5 of
this act if it becomes law) is repealed and a new
Section 7-2-7 NMSA 1978 is enacted 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, 2007:
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 $ 384 plus 4.9% of excess over $ 12,000.
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 $ 768 plus 4.9% of excess over $ 24,000.
C.
For single individuals and for estates and trusts:
If the taxable income is: The tax shall be:
Not over $5,500 1.7% of
taxable income
Over $
5,500 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 $ 504.50 plus 4.9% of excess over $ 16,000.
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 $ 625 plus 4.9% of
excess
over $ 20,000.
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 7. Section 7-2-34 NMSA 1978 (being Laws 1999,
Chapter 205, Section 1) is amended to read:
"7-2-34. DEDUCTION--NET CAPITAL GAIN INCOME.--
A.
Except as provided in Subsection C of this section, a taxpayer may claim
a deduction from net income in an amount equal to the greater of:
(1)
the taxpayer's net capital gain income for the taxable year for which
the deduction is being claimed, but not to exceed one thousand dollars
($1,000); or
(2)
the following percentage of the taxpayer's net capital gain income for
the taxable year for which the deduction is being claimed:
(a)
for a taxable year beginning in 2003, ten percent;
(b)
for a taxable year beginning in 2004, twenty percent;
(c)
for a taxable year beginning in 2005, thirty percent;
(d)
for a taxable year beginning in 2006, forty percent; and
(e)
for taxable years beginning on or
after January 1, 2007, fifty percent.
B.
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
deduction provided by this section that would have been allowed on the joint
return.
C.
A taxpayer may not claim the deduction provided in Subsection A of this
section if the taxpayer has claimed the credit provided in Section 7-2D-8.1
NMSA 1978.
D.
As used in this section, "net capital gain" means "net
capital gain" as defined in Section 1222 (11) of the Internal Revenue
Code."
Section 8. EFFECTIVE DATE.--
A.
The effective date of the provisions of Section 1 of this act is July 1,
2003.
B.
The effective date of the provisions of Section 3 of this act is January
1, 2004.
C.
The effective date of the provisions of Section 4 of this act is January
1, 2005.
D.
The effective date of the provisions of Section 5 of this act is January
1, 2006.
E.
The effective date of the provisions of Section 6 of this act is January
1, 2007.
HTRC/HB167&
SB167
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