SANTA FE — Republican leaders in both chambers of the Legislature are pressing Gov. Michelle Lujan Grisham to call a special session to repeal New Mexico’s personal income tax, arguing the governor’s proposed $250 rebate doesn’t go far enough as the state banks a wartime oil revenue windfall.
House Republican Leader Gail Armstrong, R-Magdalena; House Republican Whip Alan T. Martinez, R-Rio Rancho; and House Republican Caucus Chair Rebecca Dow, R-Elephant Butte, sent a letter to Lujan Grisham on July 7 requesting an immediate special session to repeal the tax effective July 1, 2026. Separately, Sen. Joshua A. Sanchez, R-Veguita, ranking member on the Senate Tax, Business and Transportation Committee, called Thursday for the tax’s elimination — saying the governor should convene lawmakers, or that legislators should call themselves into an extraordinary session if she won’t.
“This is not complicated,” Sanchez said in a statement. “People work hard here in New Mexico. Families out in our communities are stretching every paycheck they get.”
The dueling proposals follow Lujan Grisham’s own push for tax relief. In a June 27 Albuquerque Journal op-ed, the governor proposed a one-time $250 rebate for taxpayers, citing the financial strain New Mexico drivers have faced since fighting broke out between the U.S. and Iran in February, which sent oil prices sharply higher above $100 per barrel and pushed New Mexico gas prices up by as much as $1.30 a gallon.
New Mexico’s revenue windfall from that price spike has been a moving target. The Legislative Finance Committee’s chief economist estimated in early June that the state’s trust funds would see an $850 million boost by the end of the fiscal year.
But as oil prices retreated from their wartime peak, an LFC economist told an interim committee June 29 that the estimate had been revised to roughly $500 million, with every $1 increase in the average New Mexico price of oil adding about $57.3 million to state revenue. The personal income tax itself is projected to bring in roughly $2.2 billion this fiscal year, about 16% of the state’s general fund budget.
In their letter, House Republicans argued the state could absorb the roughly $2.2 billion annual cost of repeal without cutting recurring funding for education, health care or public safety, citing more than $12 billion in recurring general fund revenue against $11.2 billion in current recurring spending, along with more than $11 billion in state trust funds and an expected $2 billion federal payment from a recent oil and gas lease sale. If enacted, the repeal would make New Mexico the 10th state with no personal income tax, joining Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
The idea has some support among Democrats. Senate Finance Committee Chairman George Muñoz, D-Gallup, wrote in a New Mexican op-ed that reducing or eliminating the personal income tax would provide “permanent relief that grows with every paycheck.”
But a spokesperson for the governor pushed back on doing it through a special session. Communications Director Michael Coleman said in a statement that eliminating the tax would carry “recurring and significant budget implications that demand comprehensive analysis and rigorous debate” better suited to the regular 60-day session that begins in January.
The push to eliminate the income tax isn’t new. Rep. Elaine Sena Cortez, R-Hobbs, carried a repeal bill, House Bill 275, during the 2025 session; it was voted down in the House Taxation and Revenue Committee. Paul Gessing, president of the Albuquerque-based Rio Grande Foundation, testified for the bill, arguing years of oil-and-gas-fueled budget surpluses gave lawmakers room to act.
The foundation’s Errors of Enchantment blog argued at the time that projected state revenue for fiscal year 2026 was large enough to eliminate the personal income tax entirely and still leave about $400 million above the governor’s proposed spending.
