Editor:

On Sunday, January 23, on page 7 of the Observerin the lower corner, a very short article about the introduction of bills that would eliminate New Mexico’s tax on Social Security benefits was discussed.

This is huge news for all New Mexicans and for our economy.

New Mexico is a great retirement destination. The positive effect of not taxing Social Security benefits would be the increased spending and investment these retirees would (and do) bring to our communities.

If New Mexico continues to tax Social Security benefits, potential new resident retirees and those considering this as a great place to eventually retire may be deterred from choosing our state as their final destination.
Unfortunately, they can choose a higher tax state like our neighbor, Arizona.

The previous article was incorrect. Only 12 states, not 13, tax social security benefits. According to Kiplinger, these states are: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont and West Virginia.

Each state taxes social security differently. New Mexico treats Social Security benefits the same as the federal government, which taxes up to 85% of your benefits, depending on your income.

The state allows people age 65 and older with an adjusted gross income of $28,500 or less and married couples with an AGI of $51,000 or less to deduct up to $8,000 of income, which can be applied to benefits.

Other states tax Social Security benefits only if income exceeds a certain threshold. For example, Missouri taxes Social Security benefits if individual income exceeds $85,000, or $100,000 for married couples.

Why is it so important now? Because there are two bipartisan bills that would exempt Social Security benefits from income tax and repeal the current tax policy on Social Security benefits.

Senate Bill 108, titled Exemption-Social Security Income, was introduced Jan. 20 to the Senate Committee on Taxation, Business, and Transportation by Representatives Gail Armstrong and Cathrynn M. Brown, and Senator Michael Padilla.

It reads, in part, “An individual may claim an exemption of an amount equal to the amount included in adjusted gross income pursuant to Section 86 of the Internal Revenue Code.”

Essentially, this language translates to changing the current law to not tax Social Security benefits as income.

Senate Bill 121 was introduced the same day by the senses. David M. Gallegos and Mark Moores.

It has 16 legislative sponsors in total, and it reads very similarly to SB 108, regarding the tax exemption of Social Security income. Both documents can be viewed at nmlegis.gov.

The slight income tax loss would be more than offset by the increased sale and property tax income realized by retirees and new residents who move to retire here.

I encourage us to reach out to our legislative representatives to support this long overdue new exemption.

Sue Prelozni
Rio Rancho