SENATE BILL 300
55th legislature - STATE OF NEW MEXICO - first session, 2021
INTRODUCED BY
Antoinette Sedillo Lopez
AN ACT
RELATING TO TAXATION; CREATING THE PAID TIME OFF INCOME TAX CREDIT AND THE PAID TIME OFF CORPORATE INCOME TAX CREDIT.
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] PAID TIME OFF INCOME TAX CREDIT.--
A. A taxpayer who is not a dependent of another individual and who provides paid time off to employees of the taxpayer may claim a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act pursuant to this section; provided that the taxpayer employs twelve employees or fewer, and the employee for whom the paid time off is provided earned a wage of sixteen dollars ($16.00) or less per hour, for the taxable year in which the credit is claimed. The tax credit provided by this section may be referred to as the "paid time off income tax credit".
B. The paid time off income tax credit shall be allowed for three consecutive years in an amount equal to the product of an employee's paid time off hours multiplied by the employee's hourly wage, for each of the taxpayer's employees that meet the requirements of this section and further multiplied by:
(1) one hundred percent for the first taxable year the tax credit is claimed;
(2) seventy-five percent for the second taxable year the tax credit is claimed; and
(3) twenty-five percent for the third taxable year the tax credit is claimed.
C. That portion of the tax credit claimed by a taxpayer that exceeds the taxpayer's income tax liability in the taxable year in which the tax credit is claimed shall not be refunded to the taxpayer or carried forward to any other year.
D. Married individuals filing separate returns for a taxable year for which they could have filed a joint return may each claim only one-half of the paid time off income tax credit that would have been claimed on a joint return.
E. A taxpayer may be allocated the right to claim a paid time off income tax credit in proportion to the taxpayer's ownership interest if the taxpayer owns an interest in a business entity that is taxed for federal income tax purposes as a partnership or limited liability company and that business entity has met all of the requirements to be eligible for the credit. The total credit claimed by all members of the partnership or a limited liability company shall not exceed the allowable credit pursuant to this section.
F. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the tax credit to the department on a form and in a manner required by the department.
G. The department shall compile an annual report on the tax credit provided by this section that shall include the number of taxpayers approved by the department to receive the tax credit, the aggregate amount of tax credits approved and any other information necessary to evaluate the tax credit. The department shall compile and present the annual report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the tax credit.
H. As used in this section:
(1) "employee" does not mean the taxpayer or any family member of the taxpayer;
(2) "paid time off hours" means the number of hours a taxpayer paid an employee, up to eight hours per day, while the employee was not at work, not to exceed fifty-six hours for the taxable year for which the paid time off income tax credit is claimed by the taxpayer. "Paid time off hours" shall not include hours worked on a weekend or state or national holiday; and
(3) "wage" means all compensation paid to an employee through the taxpayer's payroll system, including those wages that the employee elects to defer or redirect or the employee's contribution to a 401(k) or cafeteria plan program. "Wage" does not include benefits, such as the taxpayer's contributions to insurance programs, health care, medical, dental and vision plans, life insurance, contributions to pensions, such as a 401(k), and services, such as child care, offered to the employee; or the taxpayer's share of payroll taxes, social security or medicare contributions, federal or state unemployment insurance contributions or workers' compensation."
SECTION 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:
"[NEW MATERIAL] PAID TIME OFF CORPORATE INCOME TAX CREDIT.--
A. For taxable years 2021 through 2023, a taxpayer that provides paid time off to employees of the taxpayer may claim a credit against the taxpayer's tax liability imposed pursuant to the Corporate Income and Franchise Tax Act pursuant to this section; provided that the taxpayer employs twelve employees or fewer, and the employee for whom the paid time off is provided earned a wage of sixteen dollars ($16.00) or less per hour, for the taxable year in which the credit is claimed. The tax credit provided by this section may be referred to as the "paid time off corporate income tax credit".
B. The paid time off corporate income tax credit shall be in an amount equal to the product of an employee's paid time off hours multiplied by the employee's hourly wage, for each of the taxpayer's employees that meet the requirements of this section and further multiplied by:
(1) for taxable year 2021, one hundred percent;
(2) for taxable year 2022, seventy-five percent; and
(3) for taxable year 2023, twenty-five percent.
C. That portion of the tax credit claimed by a taxpayer that exceeds the taxpayer's corporate income tax liability in the taxable year in which the tax credit is claimed shall not be refunded to the taxpayer or carried forward to any other year.
D. A taxpayer allowed a tax credit pursuant to this section shall report the amount of the tax credit to the department on a form and in a manner required by the department.
E. The department shall compile an annual report on the tax credit provided by this section that shall include the number of taxpayers approved by the department to receive the tax credit, the aggregate amount of tax credits approved and any other information necessary to evaluate the tax credit. The department shall compile and present the annual report to the revenue stabilization and tax policy committee and the legislative finance committee with an analysis of the cost of the tax credit.
F. As used in this section:
(1) "employee" does not mean the taxpayer or any family member of the taxpayer;
(2) "paid time off hours" means the number of hours a taxpayer paid an employee, up to eight hours per day, while the employee was not at work, not to exceed fifty-six hours for the taxable year for which the paid time off income tax credit is claimed by the taxpayer. "Paid time off hours" shall not include hours worked on a weekend or state or national holiday; and
(3) "wage" means all compensation paid to an employee through the taxpayer's payroll system, including those wages that the employee elects to defer or redirect or the employee's contribution to a 401(k) or cafeteria plan program. "Wage" does not include benefits, such as the taxpayer's contributions to insurance programs, health care, medical, dental and vision plans, life insurance, contributions to pensions, such as a 401(k), and services, such as child care, offered by the taxpayer to the employee; or the taxpayer's share of payroll taxes, social security or medicare contributions, federal or state unemployment insurance contributions or workers' compensation."
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