Committee Hears HB 14 to Expand Earned Income Credit; Bill Tabled After Questions Over Fiscal Impact

Representative presented House Bill 14 to the House Taxation & Revenue Committee on Monday, proposing to expand New Mexico's state earned income tax credit so it fully offsets state income tax for many lower- and middle-income workers.

The bill, the sponsor said, would expand the state credit tied to the federal Earned Income Tax Credit (EITC) and is designed to reduce or eliminate state income tax liability for working single filers and families from minimum wage up to higher thresholds. "The program currently was claimed by a 195,000 filers in 02/2023," the sponsor said, adding that HB 14 would add an estimated 101,000 workers and raise the number of workers with no state liability to "about 300,000 workers." (sponsor remarks, presentation)

Supporters from advocacy groups urged passage during public comment. Kurt Reager of Lutheran Advocacy Ministry of New Mexico said, "So we wholeheartedly support HB 14 and urge your support." Sabra Kager of the New Mexico Center on Law and Poverty told the committee, "The Earned Income Tax Credit is an extremely important and effective tool to reduce poverty and improve the well-being of workers, families, and children." Otiamba Umi of AARP New Mexico also urged passage, saying the bill would help families who currently miss credits because they earn just above eligibility cutoffs.

Committee members focused on technical and fiscal questions. Members noted two different fiscal-impact estimates: Taxation & Revenue Department documents reflected a smaller FY26 general fund impact (about $42 million in the department's filing), while the Legislative Finance Committee (LFC) staff and one internal FIR showed a higher number (the sponsor referenced a footprint that at one point had been modeled as high as $200 million during design). LFC economist Brendan Gray told the committee that methodological differences and assumptions drive the variance and that staff were "still ironing out some of those details" and expected estimates to converge with further modeling.

Lawmakers probed program design and effects. Committee members asked whether qualifying for the federal EITC would change other benefits; LFC staff said HB 14's credit is refundable and operates "below the line," and "there's provisions that prevent the EITC or the credit contemplated by HB 14 from being included in a person's eligibility for other federal or state benefits," meaning it would not alter SNAP eligibility, the economist said. Committee members also asked about the bill's effect on so-called "cliff" disincentives; the sponsor said HB 14 would smooth phaseouts so workers who get raises lose less net benefit than under current rules.

The committee received multiple favorable testimonials from across the state emphasizing workforce participation and poverty reduction. Representative Miguel Martinez told the committee HB 14 is "a very thoughtful piece of legislation" and argued the state has seen reductions in childhood poverty since prior tax reforms. Representative Montoya asked why the bill rebrands the state credit as an "earned income" credit rather than adjusting the existing working families credit; the sponsor described the proposal as an expansion of a proven federal model, not a reinvention.

The committee ultimately moved to table HB 14. A motion to table was made and accepted; no roll-call vote tally appears in the transcript.

Heading into further work, LFC staff and Taxation & Revenue representatives were asked to continue refining the fiscal modeling and examine outreach and administrative capacity for the expanded credit. The bill will remain available for further consideration later in the session or in the interim.