46th legislature - STATE OF NEW MEXICO - first session, 2003

RELATING TO TAXATION; PROVIDING A TAX CREDIT FOR SMALL BUSINESSES THAT PAY AT LEAST SIXTY PERCENT OF EMPLOYEE HEALTH INSURANCE PREMIUMS; ENACTING SECTIONS OF THE NMSA 1978.

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--EMPLOYEE HEALTH INSURANCE PREMIUMS PAID BY SMALL BUSINESS EMPLOYERS.--

A. A taxpayer who files an individual New Mexico income tax return, who is engaged in a small business and who paid at least sixty percent of the health insurance premiums for one or more employees of the taxpayer in the taxable year for which the return is filed may claim a credit in an amount equal to ten percent of the aggregate amount of the health insurance premiums paid by the taxpayer in the taxable year.

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 credit pursuant to Subsection A of this section that would have been allowed on a joint return.

C. A taxpayer who otherwise qualifies for and claims a credit pursuant to Subsection A of this section and who is a member of a partnership or business association that is the employer paying the employee health insurance premiums may claim a credit only in proportion to the taxpayer's interest in the partnership or association. The total credit claimed by all members of the partnership or association shall not exceed an amount equal to ten percent of the aggregate amount of qualifying employee health insurance premiums paid by the partnership or association in the taxable year.

D. The credit provided in this section may only be deducted from the taxpayer's income tax liability for the taxable year for which the credit is claimed.

E. As used in this section:

(1) "health insurance premium" means the amount paid by a small business to an insurer or other person that provides coverage for health care services, including preventive care, emergency care, inpatient and outpatient hospital and physician care, diagnostic laboratory and diagnostic and therapeutic radiological services, and that meets the applicable requirements of the New Mexico Insurance Code; and

(2) "small business" means a person or legal entity employing fifty or fewer employees in New Mexico who files an income tax return under the Income Tax Act."

Section 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

"[NEW MATERIAL] CREDIT--EMPLOYEE HEALTH INSURANCE PREMIUMS PAID BY SMALL BUSINESS EMPLOYER.--

A. A taxpayer that files a corporate income tax return and that is engaged in a small business and paid at least sixty percent of the health insurance premiums for one or more employees of the taxpayer in the taxable year for which the return is filed may claim a credit in an amount equal to ten percent of the aggregate amount of the health insurance premiums paid by the taxpayer in the taxable year.

B. The credit provided in this section may only be deducted from the taxpayer's corporate income tax liability for the taxable year for which the credit is claimed.

C. As used in this section:

(1) "health insurance premium" means the amount paid by a small business to an insurer or other person that provides coverage for health care services, including preventive care, emergency care, inpatient and outpatient hospital and physician care, diagnostic laboratory and diagnostic and therapeutic radiological services, and that meets the applicable requirements of the New Mexico Insurance Code; and

(2) "small business" means a corporation employing fifty or fewer employees in New Mexico that files a corporate income tax return under the Corporate Income and Franchise Tax Act."

Section 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2004.