SANTA FE — Senate Republicans are urging the state’s interim tax committee to prioritize tax relief for New Mexicans, proposing direct rebates and a potential elimination of the state personal income tax ahead of the committee’s organizational meeting later this month.
Republican members of the Revenue Stabilization & Tax Policy Committee sent a letter to the panel last week calling for a “Citizens Tax Rebate” funded by excess state revenues — money they argue should be returned to taxpayers rather than absorbed into an expanding state budget.
New Mexico’s budget has grown from $6.3 billion in fiscal year 2019 to $11.4 billion in the upcoming fiscal year 2027 — an increase of nearly 81%.
“We’re certainly not seeing 81% improvement in our road conditions, in our education outcomes, or in the public safety of our communities,” said Sen. Gabriel Ramos, R-Silver City, a member of the Senate Tax, Business & Transportation Committee. “If we’re not going to use these tax dollars to improve the lives of New Mexicans in the areas they most need it, then let’s simply put the money back in their pockets.”
Beyond a rebate, Republicans also proposed eliminating the state’s personal income tax outright — a move they say would make New Mexico more competitive with the nine states that currently impose no income tax. A more targeted alternative would expand existing exemptions for Social Security income, military pay and pensions, and would exempt tips from taxable income.
The proposal aligns with a January 2026 White House Council of Economic Advisers report, which found that states eliminating their income tax could see GDP rise by 1% to 1.6%, average wages climb by roughly $4,000, and new business startups increase by 16% to 19%.
Senate Republican Leader Bill Sharer pointed to recently released IRS migration data showing taxpayers continuing to leave high-tax states.
“New Mexico’s tax code has been left in the dust by recent improvements at the federal level,” Sharer said. “Instead of growing government, we should be growing our economy.”
The RSTP committee is expected to adopt its interim work plan at its organizational meeting later this month. If the committee does not take up the issue, Republicans said they plan to convene their own task force this summer to examine the state’s tax structure and push for reform.
.
