New Mexico lawmakers introduce bill to eliminate taxes on social security income
SANTA FE, New Mexico (KOAT) — Republican lawmakers in New Mexicoare looking to eliminate a tax for retirees.
The majority of U.S. states do not tax social security income for retirees.
“We’re one of only 13 states that taxes that kind of income,” John Garcia, the executive vice president for the Homebuilders Association of Central New Mexico, said.
Thirteen Republican state lawmakers are sponsoring House Bill 49 to exempt social security from income tax.
“We tax their social security income and therefore people leave our state to go to our neighboring states where that tax has been eliminated,” Republican Rep. Rebecca Dow said.
Dow is a bill sponsor. She said the southwest is attractive to retirees, but some go to Arizona due to this taxation.
“Pretty much the only thing that differentiates us in attracting retirees is our tax structure,” Dow said.
Democrat Rep. Christine Chandler said people move to New Mexico for the climate, the beauty, having family here, etc.
“I don’t think the data supports the premise that people move to state to acquire tax relief on their social security benefits,” Chandler said.
In the states that do not tax social security, a retirees benefits may still be subject to federal taxes depending on income. They may also be taxed on their 401(K) distributions.
Regardless, Republicans said if HB 49 becomes law, then retirees will spend their extra money on buying goods.
“Retirees that come with strong retirement packages, they don’t have to have government assistance for their medical needs. They buy RVS, they buy boats, those are the type of retirees that we should intentionally attract,” Dow said.
There are more than 300,000 retirees in New Mexico. Democrats said if social security income tax is removed, the state would lose tens of millions of dollars.
“I really don’t think that will have any impact on the people that move to New Mexico if Representative Dow has information to support that real data. I’d like to see it,” Chandler said.
In New Mexico, low income retirees are not taxed on their social security income. If HB 49 gets passed, then it would extend to all retirees with social security income.
