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F I S C A L I M P A C T R E P O R T

SPONSOR Park

DATE TYPED 01/27/05 HB 105

SHORT TITLE Income Tax Deduction For Organ Donation

SB

ANALYST Padilla-Jackson

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

($5.0)

($25.0)

Recurring

General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Taxation and Revenue Department

SUMMARY

Synopsis of Bill

House Bill 105 provides a tax deduction against net income for expenses related to donating hu-

man organs to another person. Eligible expenses include lost wages, lodging expenses, and

travel expenses. Taxpayers whose dependents donate organs would also qualify for the tax de-

duction. The tax deduction is not to exceed $10,000 in a taxable year.

The provisions of this bill would be applicable to taxable years beginning on or after January 1,

2005.

FISCAL IMPLICATIONS

The fiscal impact provided by TRD is -$5.0 in FY05 and -$25.0 in FY06. Research information

provided by TRD suggests that the total impact of the income tax deduction proposed in House

Bill 105 may be fairly minimal. According to an article published by Stateline.org on similar

legislation recently enacted in Wisconsin, only about 7,000 organ donations are provided by liv-

ing donors annually in the United States. TRD notes that since New Mexico's population repre-

sents approximately 0.64 percent of the 290 million U.S. total, the number of live organ donors

House Bill 105 -- Page 2

in this state is likely to be in the range of 45 (.64 percent multiplied by 7,000). Moreover, TRD

noted that only about 40 percent of New Mexico's personal income taxpayers possess sufficient

income to qualify for the full amount of the deduction, and the deduction would provide relief

totaling the product of their personal income tax rate and the amount of the deduction. Hence

assuming an average income tax rate of 5 percent multiplied by the maximum deduction of

$10,000 suggests an average benefit of $500 per donor. This figure multiplied by 50 donors

suggests a full-year revenue impact of approximately $25,000. This number is expected to di-

minish as the interest tax rate reductions continue through tax year 2007 occur. For FY05, the

lower estimate reflects payments for the first six months of tax year 2005 only, or approximately

20 percent of the full-year effect.

ADMINISTRATIVE IMPLICATIONS

Cost to TRD of administering the proposed measure would reportedly be relatively minor as the

bill provisions could be administered with resources currently available to the Department.

OPJ/lg