Bill > HB358

This bill establishes a new deduction for small businesses on their New Mexico income tax, applicable to taxable years beginning on or after January 1, 2016. Taxpayers who are not dependents can claim this deduction if their total business income from all businesses where they have an ownership stake is $350,000 or less, their base income is $200,000 or less, and at least one business for which they are claiming the deduction employs a full-time equivalent employee who is a New Mexico resident for at least 48 weeks, with "full-time equivalent employee" defined as someone working an average of at least 32 hours per week or a combination of employees collectively meeting that average. The deduction is calculated as a decreasing percentage of the business income, starting at 100% for the first $50,000 and reducing to 10% for the seventh $50,000, with "business income" specifically defined as taxable income from businesses with their principal place of business in New Mexico, including certain interest and non-passive income or self-employment earnings. Married individuals filing separately can claim half the deduction they would have received jointly, and the Department of Taxation and Revenue will report annually on the deduction's usage and effectiveness to legislative committees.