The House Government, Elections, and Indian Affairs Committee substitute for House Bill 477 (HGEICcs/HB 477) amends the Lodgers’ Tax Act to exempt temporary lodging agreements of at least 30 consecutive days from the occupancy tax. This change ensures that individuals who enter into extended lodging contracts are not subject to the tax. The bill maintains existing exemptions for permanent residents, government institutions, religious or charitable institutions, medical facilities, and convalescent homes. The effective date of the provisions is July 1, 2025. 

 House Bill 477 (HB 477) revises Section 3-38-16 NMSA 1978 to exempt legislators from paying the occupancy tax when they secure accommodations in a county where the state capitol is located for at least thirty consecutive days during a legislative session. The exemption applies only when a written agreement is in place between the legislator and the lodging provider. This addition expands upon the existing exemption for long-term residents who stay at a lodging establishment for at least thirty consecutive days.

The bill retains other existing exemptions under the Lodgers’ Tax Act, including exemptions for occupants paying less than $2 per day, accommodations at federal, state, or local government institutions, lodging at religious, charitable, educational, or philanthropic institutions, and accommodations provided by medical facilities, convalescent homes, and homes for the aged or indigent. The bill’s provisions take effect on July 1, 2025.

Implications

HB 477 provides a financial benefit to state legislators by exempting them from the lodgers’ tax when they stay in the county where the state capitol is located for at least thirty consecutive days during a legislative session. This exemption reduces the cost of temporary housing for legislators who travel to Santa Fe for the session, particularly those who do not reside nearby. The exemption aligns with existing tax policies that exclude long-term residents from the lodgers’ tax, ensuring that legislators staying in the capitol county for an extended period are treated similarly to other long-term occupants.

The bill may result in a minor reduction in lodgers’ tax revenue for the affected county, as it eliminates the tax for legislators who would otherwise be subject to it. However, given the relatively small number of legislators compared to the overall volume of visitors who pay the lodgers’ tax, the fiscal impact is expected to be minimal. Additionally, since many legislators already arrange for long-term accommodations, some may already qualify for existing exemptions.

The requirement for a written agreement ensures that the exemption is applied only to legislators with formal lodging arrangements, preventing potential abuse. The bill does not alter the broader structure of the Lodgers’ Tax Act, maintaining all other exemptions and tax requirements for lodging providers and guests.
 

 Under current law, the Lodgers’ Tax Act imposes an occupancy tax on guests staying in taxable premises, such as hotels and short-term rentals, unless they qualify for an exemption. The law exempts guests who reside in the taxable premises for at least thirty consecutive days, provided they have a written agreement, as well as guests at government institutions, religious or charitable facilities, medical facilities, and convalescent homes. Legislators who stay in Santa Fe during the session are currently subject to the lodgers’ tax unless they meet the long-term stay exemption applicable to all residents.  

 Committee Substitute March 5, 2025 in HGEIC

HGEICcs/HB 477: The House Government, Elections and Indian Affairs Committee Substitute for House Bill 477 HGEICcs/HB 477 revises Section 3-38-16 NMSA 1978 to clarify that temporary lodging agreements lasting at least 30 days are exempt from the lodgers’ occupancy tax. Under current law, the occupancy tax does not apply if a vendee has already been a resident of taxable premises for at least 30 consecutive days, unless the premises are designated as temporary lodging. The committee substitute removes the ambiguity in prior language by stating that the tax exemption also applies to written agreements made in advance for at least 30 days, even if the individual is not yet a resident at the time of agreement execution.

The bill maintains all previously existing tax exemptions, including exemptions for low-cost rentals (less than $2 per day), government institutions, religious or charitable organizations, hospitals, and convalescent homes. The provisions take effect July 1, 2025, ensuring time for implementation and compliance.

Comparison of Original HB 477 and HGEICcs/HB 477

The House Government, Elections, and Indian Affairs Committee made a major change to the original bill by removing a specific tax exemption for legislators and instead applying the exemption more broadly to all individuals entering into temporary lodging agreements of at least 30 days.

The original bill provided an occupancy tax exemption exclusively for New Mexico legislators who rented accommodations in the county where the state capitol is located during a legislative session. This provision was designed to reduce housing costs for lawmakers, particularly those who must travel to Santa Fe for extended periods while serving in the Legislature.

The committee substitute removes the legislator-specific exemption entirely and instead expands the scope of the exemption to any vendee who enters into a written lodging agreement for at least 30 consecutive days. This revision ensures that no special tax exemption is granted to legislators, instead treating all long-term temporary lodging arrangements equally under the law.

Implications

By replacing the legislator-specific exemption with a broader exemption for all 30-day lodging agreements, the committee avoids creating a special tax break for lawmakers while still addressing the original intent of reducing tax burdens on long-term temporary stays. This revision ensures equitable treatment under the Lodgers’ Tax Act and eliminates potential ethical concerns about granting tax exemptions specifically for elected officials.

The amendment also provides clarity for businesses and renters, ensuring that occupancy tax exemptions apply to long-term stays regardless of whether the resident has already lived in the lodging or signed an agreement in advance. This removes ambiguity that may have led to inconsistent enforcement of the tax exemption across different jurisdictions.

From a fiscal standpoint, this change could expand the number of people eligible for the tax exemption, potentially reducing local government revenues derived from the lodgers’ occupancy tax. However, it ensures that New Mexico’s tax laws remain neutral and broadly applicable rather than creating special carve-outs for specific groups such as legislators.