MEDICAL CARE EXPENSES TAX DEDUCTION

HB0224

HOUSE BILL 224

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Randall T. Pettigrew
and
Gail Armstrong

AN ACT

RELATING TO TAXATION; AMENDING AND EXPANDING AN INCOME TAX
DEDUCTION FOR UNREIMBURSED OR UNCOMPENSATED MEDICAL CARE
EXPENSES TO TAXPAYERS OF ALL INCOME LEVELS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
Section 7-2-37 NMSA 1978 (being Laws 2015 (1st
S.S.), Chapter 2, Section 3) is amended to read:

"7-2-37. DEDUCTION--UNREIMBURSED OR UNCOMPENSATED MEDICAL

CARE EXPENSES.--

A. [
Prior to January 1, 2025
] A taxpayer may claim
a deduction from net income in an amount [
determined pursuant
to Subsection B of this section for medical care
]
equal to
medical
expenses paid during the taxable year for medical care
of the taxpayer, the taxpayer's spouse or a dependent if the
expenses are not reimbursed or compensated for by insurance or
otherwise and have not been included in the taxpayer's itemized
deductions, as defined in Section 63 of the Internal Revenue
Code, for the taxable year.

[
B. The deduction provided in Subsection A of this
section may be claimed in an amount equal to the following
percentage of medical care expenses paid during the taxable
year based on the taxpayer's filing status and adjusted gross
income as follows:

(1) for surviving spouses and married
individuals filing joint returns:

If adjusted gross income is:

The following percent of

medical care expenses

paid may be deducted:

Not over $30,000

25 percent

More than $30,000 but not

more than $70,000

15 percent

Over $70,000

10 percent;

(2) for single individuals and married
individuals filing separate returns:

If adjusted gross income is:

The following percent of
medical care expenses
paid may be deducted:

Not over $15,000

25 percent

More than $15,000 but not more than

$35,000

15 percent

Over $35,000

10 percent; and

(3) for heads of household:

If adjusted gross income is:

The following percent of

medical care expenses
paid may be deducted:

Not over $20,000

25 percent

More than $20,000 but not more than

$50,000

15 percent

Over $50,000

10 percent.
]

B. A taxpayer allowed a deduction pursuant to this
section shall report the amount of the deduction to the
department in a manner required by the department.

C. The deduction provided by this section shall be
included in the tax expenditure budget pursuant to Section
7-1-84 NMSA 1978, including the annual aggregate cost of the
deduction.

[
C.
]
D.
As used in this section:

(1) "dependent" means "dependent" as defined
in Section 152 of the Internal Revenue Code;

(2) "health care facility" means a hospital,
outpatient facility, diagnostic and treatment center,
rehabilitation center, free-standing hospice or other similar
facility at which medical care is provided;

(3) "medical care" means the diagnosis, cure,
mitigation, treatment or prevention of disease or for the
purpose of affecting any structure or function of the body;

(4) "medical care expenses" means amounts paid
for:

(a) the diagnosis, cure, mitigation,
treatment or prevention of disease or for the purpose of
affecting any structure or function of the body, excluding
cosmetic surgery, if provided by a physician or in a health
care facility;

(b) prescribed drugs or insulin;

(c) qualified long-term care services as
defined in Section 7702B(c) of the Internal Revenue Code;

(d) insurance covering medical care,
including amounts paid as premiums under Part B of Title 18 of
the
federal
Social Security Act or for a qualified long-term
care insurance contract defined in Section 7702B(b) of the
Internal Revenue Code, if the insurance or other amount is paid
from income included in the taxpayer's adjusted gross income
for the taxable year;

(e) nursing services, regardless of
where the services are rendered, if provided by a practical
nurse or a professional nurse licensed to practice in the state
pursuant to the Nursing Practice Act;

(f) specialized treatment or the use of
special therapeutic devices if the treatment or device is
prescribed by a physician and the patient can show that the
expense was incurred primarily for the prevention or
alleviation of a physical or mental defect or illness; and

(g) care in an institution other than a
hospital, such as a sanitarium or rest home, if the principal
reason for the presence of the person in the institution is to
receive the medical care available; provided that if the meals
and lodging are furnished as a necessary part of such care, the
cost of the meals and lodging are "medical care expenses";

(5) "physician" means a medical doctor,
osteopathic physician, dentist, [
podiatrist
]
podiatric
physician
, chiropractic physician or psychologist licensed or
certified to practice in New Mexico; and

(6) "prescribed drug" means a drug or
biological that requires a prescription of a physician for its
use by an individual."

SECTION 2.
APPLICABILITY.--The provisions of this act
apply to taxable years beginning on or after January 1, 2026.

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