Helping hard-working New Mexicans through the tax code

Download this fact sheet (July 2023; 3 pages; pdf)

Our state’s policymakers have made several significant improvements to the tax code since 2019 that are helping New Mexicans who earn low and moderate incomes, improving equity, and increasing economic opportunity for our working families.

Working Families Tax Credit (WFTC)

The WFTC is a tax credit known to improve outcomes for working families with children. Over the last several years lawmakers have:

  • Increased it twice; by 70% in 2019 and another 47% in 2021[1]
  • Expanded it to include 41,000 young workers without children and 10,000+ immigrant workers
  • Ensured it will return an additional $90 million annually to 250,000 hard-working New Mexicans, for a total benefit of nearly $130 million once these improvements are completely phased in

Low-Income Comprehensive Tax Rebate (LICTR)

LICTR benefits those facing the biggest financial challenges in the state, including our seniors. Recently, lawmakers have:

  • Increased both the amount and income eligibility, nearly tripling its value for families
  • Indexed the rebate amount to inflation so it will hold its value over time
  • Ensured it will return an additional $50 million annually to those who need it the most, for a total benefit of $70 million to 380,000 residents[2]

Child Tax Credit (CTC)

The CTC will help reduce childhood poverty and reach every single child in New Mexico:

  • The newly enacted, recently increased, refundable credit ranges from $25-$600 per child
  • It is progressive, so families with lower incomes will receive larger credits
  • It will return $175 million annually to families in New Mexico, benefiting 475,000 children[3]

Economic Relief for Families

Tax rebates help provide economic relief for many families impacted by the pandemic:

  • Targeted tax rebates returned more than $400 million to families earning low and middle incomes in 2021 and 2022
  • An additional $1.35 billion was returned to all New Mexicans to help with the costs of inflation and rising gas prices in 2022 and 2023

Additional Tax Benefits for Families with Children

In response to federal tax changes, New Mexico enacted a tax deduction for children:

  • Federal tax changes in 2017 resulted in many New Mexicans with children having to pay more in state taxes
  • To offset this, in 2019 the state created a new $4,000 deduction for each dependent beyond the first, returning $30 million annually to New Mexico families

Tax changes have improved the fairness of our overall tax code 

[1] The credit amount of the state WFTC is a percentage of the federal Earned Income Tax Credit (EITC). The WFTC was increased in the 2019 session from 10% to 17% of the federal EITC, and from 17% to 25% in the 2021 session. The increase passed in the 2021 session is phased in: the WFTC increased to 20% for tax years 2021 and 2022, and will increase to 25% in tax year 2023 and beyond.
[2] LICTR increased in tax year 2021, and will be indexed to inflation moving forward
[3] The CTC may be claimed starting tax year 2023 and sunsets after tax year 2031