By Amber Wallin, Executive Director of New Mexico Voices for Children
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After more than two years of a pandemic and its related recession, it’s hard to remember life in 2019, let alone what great things were accomplished. This Tax Day is a good reminder that lawmakers have made several improvements to our tax code in recent years that will provide important benefits for New Mexicans in need of financial relief.
These improvements to our income tax system will benefit more than 500,000 New Mexico tax filers who earn low wages and return some $100 million more to them every year. During a time when the price of basic goods has increased, that extra money couldn’t have come at a better moment.
The first of these improvements was to the Working Families Tax Credit. The WFTC is the state version of the federal Earned Income Tax Credit—bi-partisan legislation that has long been hailed as one of the best anti-poverty programs ever enacted by Congress. Nearly 200,000 New Mexicans claim the credit, a number which will only grow larger now that eligibility was expanded to include working families who file their taxes using an Individual Taxpayer Identification Number and thousands of young workers who earn low incomes. Better yet, when coupled with tax improvements in 2019 that included a tax cut for 70% of families with children, the dollar amount for the WFTC has more than doubled, so families that are struggling to afford the increased cost of gas and groceries will get the boost they need to get by.
The second big change was to the Low-Income Comprehensive Tax Rebate. This rebate is crucial because it is available to New Mexicans who have low incomes but are not working, such as seniors and individuals with disabilities. In 2021, LICTR was expanded to include an additional 160,000 filers, the benefits it provides to families was more than tripled and the rebate was indexed to inflation, meaning it will automatically increase annually to keep up with the rising cost of necessities. Because LICTR provides extra benefits for the 56,000 seniors who receive it, this change will also provide critical relief for those New Mexico seniors most in need.
Aside from helping New Mexicans who need it most, these changes also make our tax system more fair and equitable. Our tax systems tend to most benefit the wealthy, and centuries of systemic barriers for people of color have made it difficult for a diversity of families to build generational wealth. But improvements made to our tax system in the last three years have changed that, and New Mexico is now a leader in putting communities, families and children first in tax policy.
Building on this progress, lawmakers created a new Child Tax Credit this year that will benefit every child in the state and make us one of the first states in the nation to provide this type of support for families. Lawmakers also approved one-time tax rebates—both in the regular session and in the recent one-day special session—that will provide critical relief to families who need a financial boost and also help support our local businesses and economies.
Our tax system is a critical line of defense in fighting racial inequities, reducing child poverty and helping families build financial security. Together these tax reforms will go a long way towards helping our families build better opportunities, and they make New Mexico a recognized leader in people-centered policymaking. We’re grateful that our elected officials enacted family-focused changes these last few years that will make this Tax Day—and our state’s future—a little brighter.