What impact would no state income tax have? A look at New Mexico Republicans' proposal

What impact would no income tax have? A look at NM Republicans proposal

ALBUQUERQUE, N.M. — How much money could New Mexicans save if we weren’t taxed on our income? That’s the question many are wondering after state Republicans proposed we get rid of the state personal income tax.

“I want to make sure that that middle-class father, who is going to work every day and doing his best to make a life for his family, that he gets that permanent help,” Floor Minority Whip Alan Martinez (R-NM) said.

The proposal

Minority Floor Leader Gail Armstrong, Martinez, and Republican Caucus Chair Rebecca Dow sent a letter to Gov. Michelle Lujan Grisham asking for a special session to discuss the issue.

It comes after the governor recently proposed a one-time $250 tax rebate.

“If we’re going to do something for the people of New Mexico, let’s make it permanent,” Martinez said.

Dow agrees, though she emphasized the party is not against the rebate.

“Of course, we support a rebate, but what is more important than a one-time rebate in the same month that new taxes and fees are imposed is meaningful tax reform that is permanent relief,” Dow said.

Governor’s office responds

Lujan Grisham’s office released a statement saying she won’t call a special session for this issue. She believes that type of change is better suited for a full legislative session, saying eliminating the tax would have “significant budget implications.” (The statement from the governor’s office is below.)

“I find it almost hilarious that the governor’s office would do that, being that she has been the queen of special sessions,” Martinez said.

What benefit would eliminating income tax have?

Republicans said $2 billion is what would be going back into New Mexicans’ pockets. They got that number from New Mexico’s Tax Department.

But what does that mean for the average New Mexican?

If you’re making $60,000 a year, that’s about $2,400 back each year. KOB 4 chose that number because it is slightly below the state’s median household income of approximately $67,000.

Nine other states in the U.S. don’t pay income tax, including Texas. If you take the same yearly salary, Texans pay about $10,000 in taxes.

It’s money state Republicans say New Mexicans deserve to have back in their pockets.

“This is what’s best for New Mexico. It’s not a partisan issue, we’re not giving a tax break to just Republicans, this is for everybody. Anybody who earns a paycheck would see this benefit immediately,” Martinez said.

How would having no income tax impact the state?

New Mexico uses the profit from income tax for our state’s general fund, which is something Democrats have argued would be impacted because that fund helps pay for a multitude of things: K-12 public schools, healthcare programs like Medicare, public safety, and more.

But Martinez believes the state would still be able to pay for essentials.

“I think we can make up $2 billion very easily if we put our heads together, sit at the table, Republicans and Democrats, and say these are the priorities. I don’t even think this should be a partisan issue,” Martinez said.

House Democrats said they are glad Republicans “are paying attention to skyrocketing prices,” saying they’re open to any proposals but that they “need to make sure state funds are spent in the most effective, impactful ways.” (Their full statement is below.)

The state’s Democratic Party (DPNM), on the other hand, put the Republicans on blast, telling them to “do something other than publicity stunts for once” and called the proposal a handout for the wealthy.

If this has been proposed in the past, will it fail again?

This isn’t the first time state Republicans have tried to eliminate income tax. House Bill 275 was introduced in the 2025 legislative session, but it died.

In order to pass, it would need bipartisan support. It’s not something Republicans can change on their own.

“This is a statewide issue, and that’s the way we need to look at it. This affects everybody in this state, so I would hope that we would be able to put aside partisan politics and name-calling and just get the job done,” he continued.

Despite the governor’s office’s and DPNM’s statements, Martinez still believes it’s doable.

“I think it begins the conversation with the fourth floor. I don’t think it’s a done deal because some spokesman put some statement out,” he continued.

Statement from governor’s office spokesperson Michael Coleman:

“Gov. Lujan Grisham appreciates that Republican leaders support her proposal to give New Mexicans a $250 rebate to help offset the cost of soaring gas prices that resulted from President Trump’s war in Iran.

The governor’s proposed rebate would require a one-time expenditure. Eliminating New Mexico’s personal income tax would have recurring and significant budget implications that demand comprehensive analysis and rigorous debate better suited to a regular legislative session than a special session.

If Republican leaders want to pursue this proposal, Gov. Lujan Grisham suggests they introduce legislation at the outset of the next 60-day session that begins in January.”

Statement from NM House Democrats spokesperson Paula Armstrong:

“We’re glad our Republican colleagues are paying attention to the fact that skyrocketing prices and federal cuts to vital programs have put the squeeze on New Mexicans.

New Mexico has the most improved tax fairness of any state, thanks to the state legislature’s implementation of measures like the Low-Income Comprehensive Tax Rebate, the Working Families Tax Credit, and one of the most generous Child Tax Credits in the nation.

House Democrats are open to any proposals that uplift our communities during these challenging and expensive times. As responsible stewards of taxpayer dollars, we also need to make sure state funds are spent in the most effective, impactful ways that truly benefit the hardworking folks at the heart of our state and economy.”

Statement from Democratic Party of New Mexico spokesperson Daniel Garcia:

“DPNM calls on the NM House GOP, the most unserious and ineffective legislative caucus in the country, to do something other than publicity stunts for once, and actually work alongside Democrats to help New Mexicans who have to work for a living. At a time when Trump Republicans are driving up costs on virtually everything, the NM House Republicans should be ashamed of themselves for even suggesting their latest idea for a handout for the wealthy that would be a massive shift of the tax burden onto New Mexico’s working lower and middle class.”