HOUSE HEALTH AND HUMAN SERVICES
COMMITTEE SUBSTITUTE FOR
HOUSE BILL 437
57th legislature - STATE OF NEW MEXICO - first session, 2025
AN ACT
RELATING TO TAXATION; CREATING THE QUALIFYING FOSTER CARE ORGANIZATION INCOME TAX CREDIT; PROVIDING A DELAYED REPEAL.
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] CREDIT--QUALIFYING FOSTER CARE ORGANIZATION INCOME TAX CREDIT.--
A. For taxable years beginning prior to January 1, 2031, a taxpayer who is a resident, who is not a dependent of another individual and who makes a contribution to a qualifying foster care organization may claim a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act. The credit authorized pursuant to this section may be referred to as the "qualifying foster care organization income tax credit".
B. The amount of the credit shall be in an amount equal to the amount contributed to the qualifying foster care organization, not to exceed:
(1) for single individuals, married individuals filing separate returns, heads of household and surviving spouses, five hundred dollars ($500); and
(2) for married individuals filing joint returns, one thousand dollars ($1,000).
C. To be eligible for a credit, a taxpayer shall
provide to the department the name of the qualifying foster care organization to which a contribution is made and the amount of contribution made. In addition, the organization shall provide to the department written documentation that the organization meets the requirements to be considered a qualifying foster care organization pursuant to this section. The documentation shall be signed by an officer of the organization under penalty of perjury and shall include:
(1) documentation that demonstrates to the department that the organization has been granted exemption from the federal income tax by the United States commissioner of internal revenue as an organization described in Section 501(c)(3) of the Internal Revenue Code;
(2) financial data indicating the organization's budget for the organization's prior operating year and the amount of that budget spent on foster care services; and
(3) a statement that the organization plans to continue spending at least fifty percent of the organization's budget on foster care services.
D. A taxpayer shall apply for certification of eligibility for the credit from the department on forms and in the manner prescribed by the department but shall include the information described in Subsection C of this section. Only one tax credit shall be certified per taxpayer per taxable year.
E. That portion of the credit that exceeds a taxpayer's income tax liability in the taxable year in which the credit is claimed shall not be refunded to the taxpayer but may be carried forward for five consecutive taxable years.
F. For a contribution for which the credit is claimed and that is made on or before the fifteenth day of the fourth month following the close of the taxable year, the credit may be applied to either the current or preceding taxable year and is considered to have been made on the last day of that taxable year.
G. A taxpayer who claims a deduction pursuant to the Income Tax Act for the same contribution for which the tax credit provided by this section is allowed shall not be eligible for the tax credit provided by this section for the amount deducted.
H. The credit provided by this section shall be in lieu of a deduction pursuant to Section 170 of the Internal Revenue Code and taken for purposes of the tax imposed pursuant to the Income Tax Act.
I. The credit provided by this section shall be included in the tax expenditure budget pursuant to Section 7-1-84 NMSA 1978, including the total annual aggregate cost of
the credit.
J. As used in this section:
(1) "foster care services" means cash assistance, medical care, child care, behavioral health services, food, snacks at the qualifying foster care organization's foster youth events, clothing, shelter, character education programs, workforce development programs, secondary education student retention programs, housing or financial literacy services, activities to support, train and retain foster parents licensed or certified by the children, youth and families department or a child placement agency to provide care for children in the custody of the department or agency in their role as a foster parent and activities to support caregivers and guardians pursuant to the Kinship Guardianship Act or any other assistance that is reasonably necessary to meet basic needs or provide normalcy and that is provided and used in New Mexico. As used in this paragraph, "normalcy" means the condition of experiencing a typical childhood by participating in activities that are age or developmentally appropriate, as defined in 42 U.S.C. 675;
(2) "qualifying foster care organization" means an organization that:
(a) has been granted exemption from the federal income tax by the United States commissioner of internal revenue as an organization described in Section 501(c)(3) of the Internal Revenue Code; and
(b) each operating year, provides foster care services to at least two hundred qualified individuals in New Mexico and spends at least fifty percent of its budget on foster care services to qualified individuals in New Mexico; and
(3) "qualified individual" means:
(a) a foster child. As used in this subparagraph, "foster child" means: 1) a child in the custody of the children, youth and families department or a child placement agency that may be placed with a person licensed or certified by that department or agency to provide care for the child; or 2) a participant in the fostering connections program pursuant to the Fostering Connections Act; or
(b) a person who is under twenty-seven years of age and whose reason for leaving foster care is: 1) reaching eighteen years of age; 2) adoption or legal guardianship after reaching fifteen years of age; or 3) reunification after reaching fourteen years of age."
SECTION 2. DELAYED REPEAL.--Section 1 of this act is repealed effective January 1, 2031.
SECTION 3. APPLICABILITY.--The provisions of this act apply to taxable years beginning on or after January 1, 2025.
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