The New Mexico Legislature early Thursday morning, Feb. 17, passed a compromise tax package that included eliminating the tax on Social Security benefits for moderate income retirees. Those earning over $100,000 annually would still be subject to the tax.
“It isn’t everything we were working toward,” said Joseph P. Sanchez, AARP New Mexico State Director, “but it is a reasonable compromise that we can get behind for now.”
“AARP would still like to see the tax eliminated completely but it became obvious that would not be possible in such a short legislative session. This compromise represents targeted tax relief for the middle class and lower income seniors who need it most,” Sanchez said.
“It is easy to forget that retirees don’t really have a way to grow their income and therefore, even with a modest income, many are living on a fixed budget as costs on just about everything continue to rise. Therefore, any financial relief can go a long way. And that is why, we are supporting this compromise,” he said.
“Still, New Mexico should not be among the 12 states that still tax Social Security benefits. It seems wrong to benefit by taxing people’s hard-earned benefits, that they have paid into over the course of their working life. A conversation, we hope to continue in the future,” Sanchez said.
AARP New Mexico thanks the sponsors of the five bills introduced this Session in an effort to eliminate the tax and who were instrumental in getting the compromise passed: Senators Michael Padilla, Bill Tallman, and David Gallegos, and Representatives Cathrynn Brown, Gail Armstrong, Randall T. Pettigrew, Candie Sweetser and Rebecca Dow.
“We also thank Gov. Michelle Lujan for her support on eliminating the tax and making it one of her priorities for this Session. We urge her to sign this legislation once it reaches her desk and provide New Mexico retirees with some much needed financial relief,” Sanchez said.
Under the compromise tax bill, the state tax on Social Security benefits would only apply to single individuals earning $100,000 or more; married couples filing jointly, earning $150,000; or married couples filing separately but earning $75,000 each.
Legislators, particularly in the House, seemed reluctant to eliminate the tax because low-income individuals were already excluded from being taxed. Opponents to the five different bills, introduced to eliminate the tax, even went as far to say retirees didn’t need the extra income. While other Legislators seemed to be hesitant to lose the income the tax provides to the state budget, estimated at $118 million.
A recent AARP New Mexico Survey showed overwhelming support for eliminating the tax, with 80 percent, across party lines, indicating it should be eliminated.
Other proposals to reduce or keep the tax, had much less support with 60 percent supporting a phasing out of the tax and 54 percent supporting keeping the tax on benefits but adjusting the tax thresholds.
See more on the survey at www.aarp.org/voterviewsofnmsstax