EARNED INCOME TAX CREDIT (EITC)
Rate (Fully-Refundable): 25% of the federal credit (beginning 2023)
Eligibility Requirements: All New Mexico taxpayers who qualify for the federal credit are automatically eligible. Tax filers who use Individual Taxpayer Identification Numbers (ITINs) and workers 18-24 years old are also eligible for the state credit.
Latest Legislative Action: In 2021, House Bill 291 raised the state tax credit to 20% for tax years 2021 and 2022, and increased it to 25% in tax year 2023 and beyond. Additionally, H.B. 291 included tax filers who use ITINs as well as filers 18-24 years old as eligible to receive the state EITC.
- On April 4, 2019, New Mexico Governor Michelle Lujan Grisham signed legislation to increase the state’s Earned Income Tax Credit, known as the Working Families Tax Credit, from 10% to 17% of the federal credit as part of a broader tax package.
- After being introduced at 8% in 2007, the Working Families Tax Credit was increased to 10% during a special session of the legislature in 2008, in which Governor Bill Richardson called for the purpose of providing tax relief to New Mexico families.
CHILD TAX CREDIT (CTC)
Rate (Fully-Refundable): $600 per eligible child
- Qualifying children are defined by Section 152(c) of the Internal Revenue Code.
- See below for eligible incomes:
|Adjusted gross income is over||Adjusted gross income is not over||Amount of credit per qualifying child|
|$ 0||$ 25,000||$ 600|
|$ 25,000||$ 50,000||$ 400|
|$ 50,000||$ 75,000||$ 200|
|$ 75,000||$ 100,000||$ 100|
|$ 100,000||$ 200,000||$ 75|
|$ 200,000||$ 350,000||
Latest Legislative Action: On April 7, 2023, New Mexico Governor Michelle Lujan Grisham signed House Bill 147, which increased the state CTC value to up to $600 per eligible child. The bill also annually adjusts the credit amount to account for inflation.
- In 2022, New Mexico Governor Michelle Lujan Grisham signed House Bill 163, which created a refundable Child Tax Credit of up to $175 per child.
CHILD AND DEPENDENT CARE TAX CREDIT (CDCTC)
Rate (Fully-Refundable):2 40% of qualifying expenses as defined under the federal CDCTC, not to exceed $480 per child or a total of $1,200 per family. For filers with federal tax liability, the amount of the state credit is reduced by the portion of the federal credit that applies against federal taxes.
- Filer’s adjusted gross income must not exceed $30,160
- Filer must have provided over half the cost of maintaining a household for one or more qualifying dependents for any portion of the tax year for which the credit is claimed.
- Filer must not have been a recipient of public assistance under TANF, the New Mexico Works Act, or any similar program during the portion of the tax year for which the credit is claimed.
- Qualifying expenses must be from care given in New Mexico for children under age fifteen, up to $8/day per child.