TAXPAYER DIVIDEND INCOME TAX REBATE FUND

HB0265

HOUSE BILL 265

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

INTRODUCED BY

Randall T. Pettigrew

AN ACT

RELATING TO PUBLIC FINANCE; CREATING THE TAXPAYER DIVIDEND
INCOME TAX REBATE FUND; PROVIDING FOR INCOME TAX REBATES;
CHANGING A DISTRIBUTION OF FEDERAL MINERAL LEASING FUNDS TO THE
EARLY CHILDHOOD EDUCATION AND CARE FUND TO THE TAXPAYER
DIVIDEND INCOME TAX REBATE FUND; AMENDING, REPEALING AND
ENACTING SECTIONS OF THE NMSA 1978; MAKING AN APPROPRIATION.

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

SECTION 1.
Section 6-4-27 NMSA 1978 (being Laws 2020,
Chapter 3, Section 4, as amended) is amended to read:

"6-4-27. EXCESS EXTRACTION TAXES SUSPENSE FUND--TRANSFER
OF EXCESS OIL AND GAS EMERGENCY SCHOOL TAX REVENUE--TAX
STABILIZATION RESERVE--[
EARLY CHILDHOOD EDUCATION AND CARE
]

TAXPAYER DIVIDEND INCOME TAX REBATE
FUND [
BEHAVIORAL HEALTH
TRUST FUND--SEVERANCE TAX PERMANENT FUND
].--

A. The "excess extraction taxes suspense fund" is
created as a nonreverting fund in the state treasury. Money in
the fund shall only be used to make transfers by the department
of finance and administration as required by this section.

B. At the end of each fiscal year, the department
of finance and administration shall calculate and transfer the
balance of the fund attributable to that fiscal year as
follows:

(1) [
if in the current fiscal year the total
net receipts attributable to the tax imposed pursuant to
Section 7-31-4 NMSA 1978 and distributed pursuant to Section
7-1-6.20 NMSA 1978 exceed the annual average amount, the
department shall distribute the excess amount above the annual
average amount as follows: (a)
] to the tax stabilization
reserve, the amount necessary to bring the balance of state
reserves to a level equal to twenty-five percent of the
aggregate recurring appropriations for that fiscal year from
the general fund, as determined by the department; provided
that, if the balance in the excess extraction taxes suspense
fund is not sufficient to meet that level, the entire balance
shall be transferred to the tax stabilization reserve; and

[
(b) the balance of the excess amount
above the annual average amount, if any, after the transfer is
made pursuant to Subparagraph (a) of this paragraph shall be
transferred as follows: 1) for fiscal years 2026 through 2028,
fifty percent to the early childhood education and care fund
and fifty percent to the behavioral health trust fund; provided
that if, as of the end of one of those fiscal years, the
balance of the early childhood education and care fund is less
than the balance of that fund as of the end of fiscal year
2025, the transfer to the behavioral health trust fund made
pursuant to this item shall be decreased by an amount equal to
one-half of the difference between the balance of the early
childhood education and care fund as of the end of fiscal year
2025 and the balance of that fund as of the end of that fiscal
year; and 2) for fiscal year 2029 and each fiscal year
thereafter, one hundred percent to the early childhood
education and care fund; and

(2) the remaining balance of the fund, if any,
shall be distributed to the severance tax permanent fund
]
(2)

to the taxpayer dividend income tax rebate fund, the balance
remaining in the excess extraction taxes suspense fund, if any,
after the transfer is made pursuant to Paragraph (1) of this
subsection
.

C. As used in this section,

[
(1) "annual average amount" means the total
net receipts attributable to the tax imposed pursuant to
Section 7-31-4 NMSA 1978 and distributed pursuant to Section
7-1-6.20 NMSA 1978 in the immediately preceding five fiscal
years, divided by five; and

(2)
] "state reserves" means the general fund
balances, as determined by the department of finance and
administration, including all authorized revenues and transfers
to the general fund and balances in the appropriation
contingency fund, the general fund operating reserve, the
state-support reserve fund and the tax stabilization reserve."

SECTION 2.
A new section of the Income Tax Act is enacted

to read:

"[
NEW MATERIAL
] TAXPAYER DIVIDEND INCOME TAX REBATE FUND--CREATED--INCOME TAX REBATES.--

A. The "taxpayer dividend income tax rebate fund"
is created as a nonreverting fund in the state treasury. The
fund shall consist of distributions, appropriations, gifts,
grants and donations. The fund shall be administered by the
department, and money in the fund is appropriated to the
department to provide income tax rebates as provided by this
section. Disbursements from the fund shall be made by warrant
of the secretary of finance and administration pursuant to
vouchers signed by the secretary of taxation and revenue or the
secretary's designee.

B. A resident who files a New Mexico income tax
return and who is not a dependent of another individual shall
be eligible for a tax rebate pursuant to this section. The
resident shall receive a rebate in an amount equal to the
amount of money in the taxpayer dividend income tax rebate fund
at the end of the previous calendar year divided by the total
number of residents who filed an income tax return for that
year. A rebate shall not be allowed for a return filed after
May 31. Rebates shall be provided by the department as soon as
practicable.

C. The rebates provided by this section may be

deducted from the taxpayer's New Mexico income tax liability.
If the amount of rebate exceeds the taxpayer's income tax
liability, the excess shall be refunded to the taxpayer.

D. The department may require a taxpayer to claim a

rebate provided by this section on forms and in a manner

required by the department.

E. An annual report shall be submitted no later
than October 1 each year to the legislative finance committee,
the revenue stabilization and tax policy committee and any
other appropriate interim committees on the cost of the rebates
provided pursuant to this section and any other information
necessary to evaluate the rebates."

SECTION 3.
Section 22-8-34 NMSA 1978 (being Laws 1967,
Chapter 16, Section 90, as amended) is amended to read:

"22-8-34. FEDERAL MINERAL LEASING FUNDS.--

A. Money received by the state pursuant to the
provisions of the federal Mineral Leasing Act shall be
distributed to the public school fund, except as follows:

(1) an annual appropriation to the
instructional material fund;

(2) an annual appropriation to the board of
regents of the New Mexico institute of mining and technology
for the bureau of geology and mineral resources;

(3) the distribution made pursuant to
Subsection B of this section; and

(4) the distribution made [
pursuant to Section
3 of this 2020 act
]
pursuant to Subsection C of this section
.

B. Money received by the state as its share of a
prepayment of royalties pursuant to 30 U.S.C. 1726(b), as that
section may be amended or renumbered, shall be distributed as
follows:

(1) a portion of the receipts, estimated by
the taxation and revenue department to be equal to the amount
that the state would have received as its share of royalties in
the same fiscal year if the prepayment had not been made, shall
be distributed to the public school fund; and

(2) the remainder shall be distributed to the
common school permanent fund.

C. If, by June 30 of each fiscal year, the net
receipts for that fiscal year of the money received by the
state pursuant to the federal Mineral Leasing Act exceed the
annual average amount, the excess shall be distributed to the
taxpayer dividend income tax rebate fund. If there is an
excess amount, the distribution shall be made as soon as
practicable. If there is not an excess amount, no distribution
shall be made to the fund. The department of finance and
administration shall make the calculation to determine if an
excess amount shall be distributed. As used in this
subsection, "annual average amount" means the total net
receipts attributable to money received by the state pursuant
to the federal Mineral Leasing Act in the immediately preceding
five fiscal years, divided by five.
"

SECTION 4.
REPEAL.--Section 9-29A-3 NMSA 1978 (being Laws
2020, Chapter 3, Section 3, as amended) is repealed.

SECTION 5.
APPLICABILITY.--The provisions of Section 2 of
this act apply to taxable years beginning on or after January
1, 2026.

- 7 -