Tax changes, prescription drug disclosure among new NM laws set to take effect

SANTA FE — New Mexico’s personal income tax structure will be retooled and prescription drug manufacturers will have to start disclosing pricing information to state regulators under laws that took effect Jan. 1.

The changes are among several new laws approved by lawmakers during the 2024 legislative session that hit the books at the start of the new year. Most other approved bills have already taken effect.

The tax code changes mark the first sweeping adjustment to New Mexico’s personal income tax brackets since 2005 and were approved as part of a broad tax package.

Taxpayers are projected to save roughly $159 million in the coming year under the new brackets, with lower-income New Mexicans benefitting the most in terms of savings.

For example, a married couple filing jointly with an annual taxable income of $90,000 will pay a 4.7% tax rate starting this year — down from 4.9% under the previous tax code.

And a single individual with a $25,000 taxable income will see an ever larger reduction — from 4.9% to 4.3% under the new brackets.

Rep. Derrick Lente, D-Sandia Pueblo, described the new tax brackets as an investment in New Mexico workers that lawmakers have been studying for years.

“It’s going to really affect the lower- and middle-income folks,” Lente said Tuesday. “If the state is doing well, the people of the state should be feeling that as well.”

Other tax changes taking effect Jan. 1 include limiting the maximum capital gains deduction taxpayers can claim at $2,500 and setting a new single corporate income tax rate, instead of a two-tiered system.

Those two changes will both lead to more revenue for the state, as a legislative analysis projected they would lead to $77 million in additional tax dollars in the coming budget year.

Lente, the chairman of the House Taxation and Revenue Committee, said he believes the tax code changes will be sustainable, even if state revenue levels drop after several years of record-setting growth.

He also said additional tax changes will be pursued during the upcoming 60-day legislative session.

Those changes could include an expansion of a tax break called the Low-Income Comprehensive Tax Rebate, which is currently offered to individuals with a modified gross income of $36,000 or less per year.

As for other laws taking effect Wednesday, the prescription drug price transparency act will require annual reporting of drug prices and trends by manufacturers, health insurers and pharmacy benefits managers.

The law is intended to provide more information to consumers, said Sen. Liz Stefanics, D-Cerrillos, who was among its sponsors at the Roundhouse.

It could also shine greater light on how much prescription drug prices are marked up as they move from manufacturers toward consumers, she said.

The state Office of the Superintendent of Insurance will be tasked with gathering the submitted data and making it available to the public on the agency’s website.

Among the information that will have to be submitted by May 1 is a list of the 25 most frequently prescribed prescription drugs in New Mexico.