SENATE BILL 544

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

INTRODUCED BY

Sue Wilson Beffort

AN ACT

RELATING TO TAXATION; PROVIDING FOR INCOME TAX AND CORPORATE INCOME TAX CREDITS FOR THE PROVISION OF EMPLOYER-SPONSORED HEALTH INSURANCE.

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] INCOME TAX--CREDIT FOR COSTS OF PROVIDING EMPLOYER-SPONSORED HEALTH INSURANCE.--

          A. A taxpayer who files an individual New Mexico income tax return who is not a dependent of another individual and who is an owner of a New Mexico business may claim a tax credit in an amount not to exceed five percent of the employer's cost of employer-sponsored health insurance provided to the taxpayer's employees or their dependents while the employees or their dependents are residents of New Mexico during the taxable year for which the credit is claimed if the taxpayer employs an average of fewer than ten employees during that taxable year and if a credit for providing employer-sponsored health insurance to those employees or their dependents is not claimed pursuant to the Corporate Income and Franchise Tax Act.

          B. A taxpayer who claims a tax credit pursuant to Subsection A of this section may claim an additional tax credit in an amount not to exceed five percent of the employer's cost of providing employer-sponsored health insurance to the taxpayer's employees or their dependents while the employees or dependents are residents of New Mexico if the taxpayer has not provided employer-sponsored health insurance to the taxpayer's employees or their dependents within the previous twelve months.

          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 credit provided in this section may only be deducted from the taxpayer's income tax liability for the taxable year. If the credit exceeds the taxpayer's income tax liability for the taxable year, the excess shall be refunded to the taxpayer.

          E. For the purposes of this section, "employer-sponsored health insurance" means health insurance for which an employer completely or partially pays the costs for its employees or their dependents."

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

     "[NEW MATERIAL] CORPORATE INCOME TAX--CREDIT FOR COSTS OF PROVIDING EMPLOYER-SPONSORED HEALTH INSURANCE.--

          A. A taxpayer that files a corporate income tax return and that is a New Mexico business may claim a tax credit in an amount not to exceed five percent of the employer's cost of employer-sponsored health insurance provided to the taxpayer's employees or their dependents while the employees or dependents are residents of New Mexico during the taxable year for which the credit is claimed if the taxpayer employs an average of fewer than ten employees during that taxable year and if a credit for providing employer-sponsored health insurance to those employees or their dependents is not claimed pursuant to the Income Tax Act.

          B. A taxpayer that claims a tax credit pursuant to Subsection A of this section may claim an additional tax credit in an amount not to exceed five percent of the employer's cost of providing employer-sponsored health insurance to the taxpayer's employees or their dependents while the employees or dependents are residents of New Mexico if the taxpayer has not provided employer-sponsored health insurance to the taxpayer's employees or their dependents within the previous twelve months.

          C. A credit provided in this section may only be deducted from the taxpayer's corporate income tax liability for the taxable year. If the credit exceeds the taxpayer's corporate income tax liability for the taxable year, the excess shall be refunded to the taxpayer.

          D. For the purposes of this section, "employer- sponsored health insurance" means health insurance for which an employer completely or partially pays the costs for its employees or their dependents."

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

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