Social Security: New Mexico Moves Closer To Eliminating Taxes on Most Social Security Benefits
New Mexico took another step toward becoming the next state to eliminate personal taxes on most Social Security benefits after legislators last week moved a bill on the proposal to its final committee.
The bill, called SB108, was one of several introduced during the current session that seek to exempt Social Security benefits from personal income taxes, the Las Cruces Sun-News reported. SB108 has bipartisan support as well as the backing of Gov. Michelle Lujan Grisham. As of Friday, Feb. 11, the bill was being reviewed by the state Senate’s Tax, Business and Transportation Committee.
“It’s high time that we eliminate the tax on Social Security,” state Sen. Michael Padilla, SB 108’s Democratic co-sponsor, told the Las Cruces Sun-News. “We’re one of only 12 states remaining that still tax Social Security. This is an issue that has faced a lot of New Mexico families in retirement.”
If the bill becomes law, the tax exemption on Social Security income would take effect in the current tax year. It wouldn’t be available to everyone, however. The bill caps the exemption at $75,000 for married couples filing separately, $150,000 for married couples filing jointly and $100,000 for individuals, which means New Mexico would still tax Social Security benefits for some residents.
According to Kiplinger, the other states besides New Mexico that tax Social Security benefits are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, Rhode Island, Utah, Vermont and West Virginia.
As GOBankingRates previously reported, personal income taxes in New Mexico currently apply to Social Security benefits on all but lower-income residents. Individuals earning up to $25,000 a year and joint tax filers earning up to $32,000 get a full exemption. Lawmakers in the state have introduced competing bills to eliminate or scale back the tax.
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