CHILD CARE FACILITY DONATION TAX CREDIT

SB0170

SENATE BILL 170

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

INTRODUCED BY

Heather Berghmans

AN ACT

RELATING TO TAXATION; CREATING THE CHILD CARE FACILITY DONATION
INCOME TAX CREDIT AND THE CHILD CARE FACILITY DONATION
CORPORATE INCOME TAX CREDIT.

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

SECTION 1.
A new section of the Income Tax Act is enacted
to read:

"[
NEW MATERIAL
]

CREDIT--CHILD CARE FACILITY DONATION
INCOME TAX CREDIT.--

A. For taxable years prior to January 1,
2037
, a
taxpayer who is not a dependent of another individual and who
makes a donation to a licensed child care facility may claim a
credit against the taxpayer's tax liability imposed pursuant to
the Income Tax Act. The credit authorized pursuant to this
section may be referred to as the "child care facility donation
income tax credit".

B. The amount of the credit shall be in an amount
equal to the amount donated in the taxable year, not to exceed
five hundred thousand dollars ($500,000) per taxpayer.

C. To be eligible for the tax credit, a donation
shall be:

(1) monetary;

(2) made to a qualifying child care facility
or program that meets the minimum enrollment requirements to
receive subsidies from the state;

(3) used to promote child care in New Mexico
for children twelve years of age or younger; and

(4) certified by the early childhood education
and care department.

D. A taxpayer shall apply for certification of
eligibility for the credit from the early childhood education
and care department on forms and in the manner prescribed by
that department. Except as provided in Subsections G and H of
this section, only one tax credit shall be certified per
taxpayer per taxable year. The total annual aggregate amount
of child care facility donation income tax credits and child
care facility donation corporate income tax credits that may be
certified in a calendar year shall not exceed ten million
dollars ($10,000,000). Completed applications shall be
considered in the order received. Applications for
certification received after this limitation has been met in a
calendar year shall not be approved. The early childhood
education and care department shall post monthly on that
department's website the aggregate amount of credits claimed
per calendar year.

E. If the early childhood education and care
department determines that a taxpayer meets the requirements of
this section, that department shall issue a dated certificate
of eligibility to the taxpayer providing the amount of tax
credit for which the taxpayer is eligible and the taxable years
in which the credit may be claimed. The early childhood
education and care department shall provide the department with
the certificates of eligibility issued pursuant to this
subsection in an electronic format at regularly agreed-upon
intervals.

F. That portion of the credit that exceeds a
taxpayer's income tax liability in the taxable year in which
the credit is claimed shall be refunded to the taxpayer.

G. Married individuals filing separate returns for
a taxable year for which they could have filed a joint return
may claim only one-half of the credit that would have been
claimed on a joint return.

H. A taxpayer may be allocated the right to claim
the credit in proportion to the taxpayer's ownership interest
if the taxpayer owns an interest in a business entity that is
taxed for federal income tax purposes as a partnership or
limited liability company and that business entity has met all
of the requirements to be eligible for the credit. The total
credit claimed by all members of the partnership or limited
liability company shall not exceed the allowable credit
pursuant to this section.

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

J. As used in this section:

(1) "donation" means a monetary donation to a
licensed child care facility, but does not include a donation
made by a taxpayer:

(a) that claims the child care facility
donation corporate income tax credit;

(b) that is an owner of the licensed
child care facility;

(c) whose spouse, sibling, parent, aunt,
uncle, grandparent, child or grandchild is an owner of the
licensed child care facility;

(d) that is an investor of the licensed
child care facility; or

(e) that is otherwise affiliated with
the licensed child care facility; and

(2) "licensed child care facility" means a
child care center, a group child care home, a family child care
home or an out-of-school time program licensed by the early
childhood education and care department that provides at least
fifty percent of its child care services to children who
receive child care assistance pursuant to contracts with the
early childhood education and care department."

SECTION 2.
A new section of the Corporate Income and
Franchise Tax Act is enacted to read:

"[
NEW MATERIAL
]

CREDIT--CHILD CARE FACILITY DONATION
CORPORATE INCOME TAX CREDIT.--

A. For taxable years prior to January 1,
2037
, a
taxpayer that makes a donation to a licensed child care
facility may claim a credit against the taxpayer's tax
liability imposed pursuant to the Corporate Income and
Franchise Tax Act. The credit authorized pursuant to this
section may be referred to as the "child care facility donation
corporate income tax credit".

B. The amount of the credit shall be in an amount
equal to the amount donated in the taxable year, not to exceed
five hundred thousand dollars ($500,000) per taxpayer.

C. To be eligible for the tax credit, a donation
shall be:

(1) monetary;

(2) made to a qualifying child care facility
or program that meets the minimum enrollment requirements to
receive subsidies from the state;

(3) used to promote child care in New Mexico
for children twelve years of age or younger; and

(4) certified by the early childhood education
and care department.

D. A taxpayer shall apply for certification of
eligibility for the credit from the early childhood education
and care department on forms and in the manner prescribed by
that department. The total annual aggregate amount of child
care facility donation income tax credits and child care
facility donation corporate income tax credits that may be
certified in a calendar year shall not exceed ten million
dollars ($10,000,000). Completed applications shall be
considered in the order received. Applications for
certification received after this limitation has been met in a
calendar year shall not be approved. The early childhood
education and care department shall post monthly on that
department's website the aggregate amount of credits claimed
per calendar year.

E. If the early childhood education and care
department determines that a taxpayer meets the requirements of
this section, that department shall issue a dated certificate
of eligibility to the taxpayer providing the amount of tax
credit for which the taxpayer is eligible and the taxable years
in which the credit may be claimed. The early childhood
education and care department shall provide the department with
the certificates of eligibility issued pursuant to this
subsection in an electronic format at regularly agreed-upon
intervals.

F. That portion of the credit that exceeds a
taxpayer's income tax liability in the taxable year in which
the credit is claimed shall be refunded to the taxpayer.

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

H. As used in this section:

(1) "donation" means a monetary donation to a
licensed child care facility, but does not include a donation
made by a taxpayer that:

(a) claims the child care facility
donation income tax credit;

(b) is an investor of the licensed child
care facility; or

(c) is an entity that is otherwise
affiliated with the licensed child care facility; and

(2) "licensed child care facility" means a
child care center, a group child care home, a family child care
home or an out-of-school time program licensed by the early
childhood education and care department that provides at least
fifty percent of its child care services to children who
receive child care assistance pursuant to contracts with the
early childhood education and care department."

SECTION 3.
APPLICABILITY.--The provisions of this act
apply to taxable years beginning on or after January 1, 2026.

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