SENATE BILL 238

47th legislature - STATE OF NEW MEXICO - second session, 2006

INTRODUCED BY

John Arthur Smith

AN ACT

RELATING TO TAXATION; PROVIDING FOR AN INCOME TAX CREDIT FOR CONTRIBUTIONS TO CERTAIN NONPROFIT ORGANIZATIONS THAT ALLOCATE REVENUES FOR EDUCATIONAL SCHOLARSHIPS OR TUITION GRANTS FOR STUDENTS TO ATTEND PRIVATE SCHOOLS.

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] SCHOOL TUITION TAX CREDIT.--

          A. A taxpayer who files an individual New Mexico income tax return and who is not a dependent of another individual may claim, in lieu of a deduction taken by the taxpayer pursuant to Section 170 of the Internal Revenue Code, a credit in an amount not to exceed five hundred dollars ($500) of a contribution made by the taxpayer during the taxable year to a charitable organization described in Section 501(c)(3) of the Internal Revenue Code that allocates at least ninety percent of its annual revenue for educational scholarships or tuition grants to students to attend accredited private elementary or secondary schools in New Mexico. The tax credit provided by this section may be referred to as the "school tuition tax credit".

          B. The tax credit provided in this section may only be deducted from the taxpayer's New Mexico income tax liability for the taxable year. Any portion of the maximum credit provided by this section that remains unused at the end of the taxable year may be carried forward for five taxable years.

          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 credit that would have been allowed on a joint return.

          D. A taxpayer who claims a school tuition tax credit for a contribution made by a partnership or other business association of which the taxpayer is a member may claim a credit only in proportion to the taxpayer's interest in the partnership or association.

          E. For the purposes of this section, "dependent" means "dependent" as defined in Section 152 of the Internal Revenue Code."

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

     "[NEW MATERIAL] SCHOOL TUITION TAX CREDIT.--

          A. A taxpayer that files a New Mexico corporate income tax return may claim, in lieu of a deduction taken by the taxpayer pursuant to Section 170 of the Internal Revenue Code, a credit in an amount not to exceed five hundred dollars ($500) of a contribution made by the taxpayer during the taxable year to a charitable organization described in Section 501(c)(3) of the Internal Revenue Code that allocates at least ninety percent of its annual revenue for educational scholarships or tuition grants to students to attend accredited private elementary or secondary schools in New Mexico. The tax credit provided by this section may be referred to as the "school tuition tax credit".

          B. The tax credit provided in this section may only be deducted from the taxpayer's corporate income tax liability for the taxable year. Any portion of the maximum credit provided by this section that remains unused at the end of the taxable year may be carried forward for five taxable years."

      Section 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2006.

- 3 -