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F I S C A L I M P A C T R E P O R T
SPONSOR Carraro
DATE TYPED 2-28-2005 HB
SHORT TITLE Armed Forces Salary Income Tax Exemption
SB 630/aSCORC
ANALYST Taylor
REVENUE
Estimated Revenue
Subsequent
Years Impact
Recurring
or Non-Rec
Fund
Affected
FY05
FY06
($5,500.0) ($11,000.0)
Similar Recurring
General Fund
(Parenthesis ( ) Indicate Revenue Decreases)
Relates to HB 50, SB 450 and SB 394
SOURCES OF INFORMATION
LFC Files
Taxation and Revenue Department (TRD)
SUMMARY
Synopsis of SCORC Amendment
The SCORC amendment strikes the word retirement from section 1, thereby making the title for
the section consistent with the text.
Synopsis of Original Bill
Senate Bill 630 exempts salaries paid by the United States to persons actively serving in the
armed forces from the state income tax.
FISCAL IMPLICATIONS
The Taxation and Revenue Department estimates that the exemption provided in this bill will
reduce state general fund revenues by $11 million in FY06. The estimate is based on an average
military salary of $45,000. Adjusting this for currently allowed exemptions and deductions, the
average taxable amount would be $31,500. There are approximately 7,000 New Mexicans ac-
tively serving in the armed forces. The fiscal impact estimate is arrived at by multiplying 7,000
taxpayers by the average taxable salary of $31,500 and by an average income tax rate of 5 per-
cent.