By Paige Knight
March 17, 2025
Our people are our greatest asset. When we prioritize them in tax policy, we provide New Mexicans of all ages greater opportunity for prosperity and economic well-being. This year’s tax omnibus bill (House Bill 14) is a great example of putting people over corporate profits.
There are many things to be proud of in New Mexico, but high up on the list is the honor of having the most improved tax code in the nation, thanks to the expansion of tax credits for those earning low incomes, the creation of a state Child Tax Credit, a reduction in the regressive gross receipts tax, and the narrowing of inequitable tax giveaways for investment profits.
HB 14 continues this important progress with a thoughtful redesign of the state’s Working Families Tax Credit, which would now become the Earned Income Tax Credit (EITC). Studies show that state and federal EITCs reduce poverty and childhood hunger, improve education and health outcomes for children and families, and increase earnings, employment, and workforce participation.
The EITC would continue providing an income boost to low-paid workers, but it would amplify these many studied benefits by providing a more generous credit amount and by extending the credit to more than 100,000 additional hard-working New Mexicans. This means that more families would be able to afford healthy food, pay their bills, and secure greater economic stability. The expanded phase-out of the credit amounts would also help mitigate any potential cliff effects that workers may experience from a pay increase or a job transition.
HB 14 is a fiscally responsible package, providing a fair, equitable way to pay for the EITC expansion by enacting a modest surtax on oil. This helps ensure that an industry that has experienced record profits over the last several years is paying its fair share for the benefit of extracting the natural resources that belong to all of us. The revenue generated will allow the state to maintain healthy reserves, which is critical given the uncertainty around the federal budget and its impact on New Mexico.
As HB 14 moves forward in the legislative process, we hope that with the additional financial capacity provided by the surtax, the Senate will include Senate Bill 294 in the tax package and increase the state’s Child Tax Credit for young children under 6. These early years are the most critical for child development and also a time when parents are more likely to be struggling financially as they are more likely to be early on in their careers.
HB 14, as it stands, prioritizes our greatest asset – the people of New Mexico – over the profits of a single industry. The EITC will provide thousands of New Mexicans with a boost in cash assistance they can use to help afford stable housing, invest in themselves or their family’s well-being, pay for school supplies or textbooks, and so much more. We thank the sponsors, Chair Derrick Lente and Speaker Javier Martinez, for their dedication to tax equity and the hard-working people of New Mexico.
Paige Knight, MPP, is a Deputy Policy Director at NM Voices for Children.