SENATE BILL 313

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

INTRODUCED BY

John Arthur Smith

FOR THE REVENUE STABILIZATION AND TAX POLICY COMMITTEE

AN ACT

RELATING TO TAXATION; EXPANDING A PERSONAL INCOME TAX EXEMPTION FOR LOW- AND MIDDLE-INCOME TAXPAYERS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. Section 7-2-5.8 NMSA 1978 (being Laws 2005, Chapter 104, Section 5) is amended to read:

     "7-2-5.8. EXEMPTION FOR LOW- AND MIDDLE-INCOME TAXPAYERS.--

          A. An individual may claim an exemption in an amount specified in Subsections B through D of this section not to exceed an amount equal to the number of federal exemptions multiplied by two thousand five hundred dollars ($2,500) of income includable, except for this exemption, in net income. Individuals having income both within and without this state shall apportion this exemption in accordance with regulations of the secretary.

          B. For a married individual filing a separate return [with adjusted gross income up to twenty thousand three hundred thirty-three dollars ($20,333)]:

                 (1) if the adjusted gross income is not over twelve thousand dollars ($12,000), the amount of the exemption pursuant to this section shall be two thousand five hundred dollars ($2,500) for each federal exemption; and

                 (2) if the adjusted gross income is over twelve thousand dollars ($12,000) [but not over twenty thousand three hundred thirty-three dollars ($20,333)], the amount of the exemption pursuant to this section for each federal exemption shall be calculated as follows:

                     (a) two thousand five hundred dollars ($2,500); less

                     (b) twenty percent of the amount obtained by subtracting twelve thousand dollars ($12,000) from the adjusted gross income.

          C. For single individuals [with adjusted gross income up to twenty-seven thousand one hundred ten dollars ($27,110)]:

                 (1) if the adjusted gross income is not over sixteen thousand dollars ($16,000), the amount of the exemption pursuant to this section shall be two thousand five hundred dollars ($2,500) for each federal exemption; and

                 (2) if the adjusted gross income is over sixteen thousand dollars ($16,000) [but not over twenty-seven thousand one hundred ten dollars ($27,110)], the amount of the exemption pursuant to this section for each federal exemption shall be calculated as follows:

                     (a) two thousand five hundred dollars ($2,500); less

                     (b) fifteen percent of the amount obtained by subtracting sixteen thousand dollars ($16,000) from the adjusted gross income.

          D. For married individuals filing joint returns, surviving spouses or for heads of households [with adjusted gross income up to forty thousand six hundred sixty-seven dollars ($40,667)]:

                 (1) if the adjusted gross income is not over twenty-four thousand dollars ($24,000), the amount of the exemption pursuant to this section shall be two thousand five hundred dollars ($2,500) for each federal exemption; and

                 (2) if the adjusted gross income is over twenty-four thousand dollars ($24,000) [but not over forty thousand six hundred sixty-seven dollars ($40,667)], the amount of the exemption pursuant to this section for each federal exemption shall be calculated as follows:

                     (a) two thousand five hundred dollars ($2,500); less

                     (b) ten percent of the amount obtained by subtracting twenty-four thousand dollars ($24,000) from the adjusted gross income.

          E. For the purposes of this section, "federal exemption" means an exemption allowable for federal income tax purposes for an individual included in the return who is domiciled in New Mexico."

     Section 2. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2006.

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