January 21, 2022

Effort to eliminate Social Security tax gains momentum

The push to eliminate New Mexico’s income tax on Social Security benefits is gaining traction at the Roundhouse.

Two senators, Democrat Michael Padilla of Albuquerque and Republican David Gallegos of Eunice, introduced separate bills Thursday that would eliminate the tax on Social Security income.

Sen. Bill Tallman, D-Albuquerque, previously introduced a bill to repeal the tax, but it would still affect higher earners and increase the tax on cigarettes and other tobacco products to make up the loss in state revenue.

Padilla said his proposal, Senate Bill 108, has been endorsed by Gov. Michelle Lujan Grisham, who called on lawmakers Tuesday during her State of the State address to end the tax and whose office issued a news release late Thursday reiterating the request.

“We have never had a better opportunity to eliminate income taxes on Social Security like we do right now,” Padilla said. “Record revenues make it possible to help hundreds of thousands of retired New Mexicans enjoy greater financial peace of mind.”

Unlike Tallman’s bill, Padilla said his proposal is a “sweeping elimination” of the tax.

“It is going to have a fiscal impact of approximately $70 million,” he said.

Padilla said he has introduced the bill four times in the past and feels confident it will pass during this year’s 30-day legislative session.

“Social Security is a sacred promise, and it’s time for us here in New Mexico to stop taxing Social Security benefits,” he said. “It takes, literally, food off the table of retired New Mexicans. It makes the state look unattractive from a retirement standpoint.”

The bill Gallegos introduced, which is co-sponsored by the Senate Republican Caucus, wouldn’t raise taxes, either.

“There is simply no excuse to not get this done for our seniors this year,” Sen. Mark Moores, R-Albuquerque, who serves as caucus chair, said in a statement.

“The relative cost of this is a drop in the proverbial bucket of funds this state has at the moment, not to mention the positive impact this bill will have on our state’s future,” added Moores, who has pushed for the elimination of the personal income tax in the past.

New Mexico is one of only 13 states that taxes Social Security.

“We must unburden the New Mexicans who rely on Social Security benefits by cutting their taxes,” Lujan Grisham, who is running for reelection this year, said during her State of the State address Tuesday. “This is good government, serving the people who have asked us to serve them.”

Follow Daniel J. Chacón on Twitter @danieljchacon.