Major Tax Reduction for Military Retirees to Attract Productive Retirees to NM, to Spur Economic Development, to Thank for Service

By NM Republican Office 

Desired Outcomes:

• Encourage  military to retire in NM, maintaining a highly educated, techical job pool that is now moving out of state
• Allows military services retirees or their surviving spouse to not pay state income tax on  up to $25,000 of their military retirment pay, phased-in.
• Support and recognize the service of military retirees
• Applicable beginning tax year  2020

 

Introduced a phased in schedule for the deduction:

1) Taxable year starting Jan. 1, 2020 to Jan. 1, 2021service members can deduct 25% not to exceed $6,250

2) Taxable year starting Jan. 1, 2021 to Jan. 1, 2022service members can deduct 50% not to exceed $12,500

3) Taxable year starting Jan. 1, 2023 to Jan. 1, 2024service members can deduct 75% not to exceed $18,750

4) for taxable years starting Jan. 1, 20250 100% is deducted, not to exceed $25,000

 

Santa Fe – More military retirees would be encouraged to retire in New Mexico if they receive a break on their state income taxes.  Military retirees or their surviving spouces would be free from paying state income tax on up to $25,000 under a bill  sponsored by Senator William F. (Bill) Burt of Alamorgordo. SB 330 provides all retirees from the  military services or their surviving spouses a state income tax deductions up to $25,000 on  their military retirement or retainer pay. It heads to the powerful Senate Finance Committee after passing the Senate Corporation and Transportation Commission.

 

SB  330  adds a provision to New Mexico’s Income Tax Act providing for deductions from retirees’ net income from military retirement or retainer pay.  If the bill becomes law, it would apply to taxable year 2020.

 

“This tax break  is one small  way we can recognize the extraordinary service military retirees have provided for their country and communities.  It will also allow New Mexico to maintain a highly educated, highly technical job pool that employers want.  That talented pool  now moves or stays out of state because the taxes on their retirement income in New Mexico is out of line with surrounding states. On the otherhand,  the jobs are not here partly because the talent pool is not here,” Senator Burt said. “In their retirement from the  military, these skilled and educated folks often open their own businesses or help existing businesses grow. We want that talent to come to New Mexioc or stay here when they retire from their military service to our nation,” said  Senator Burt.

 

The bill specifies that the deduction is for “uniformed retirees,” meaning former members of the United States’ uniformed services who, due to having enough qualified years of service, have separated from military service with lifetime benefits.