Summary:

 House Bill 225 (HB 225) establishes a refundable state income tax credit for foster parents. The bill allows foster parents to claim $100 per week for each child they foster during the taxable year. The credit applies to taxable years beginning on or after January 1, 2025. 

Legislation Overview:

 House Bill 225 (HB 225) creates the Foster Parent Income Tax Credit, allowing eligible taxpayers who serve as foster parents to receive a refundable tax credit based on the duration of care provided. The amount of credit is $100 per week for each child fostered. Foster parents must be licensed or certified by the Children, Youth, and Families Department (CYFD) or an approved child placement agency.

Taxpayers must apply for eligibility certification from CYFD, which will issue certificates confirming the taxpayer’s qualification for the credit. The credit may only be claimed for three taxable years following certification. Married couples filing separately may each claim half of the eligible credit amount.

Implications
HB 225 is expected to reduce state tax revenues by providing direct financial support to foster parents. The credit may encourage more individuals to become foster parents, potentially improving child welfare outcomes. Administrative costs will arise from certifying eligible foster parents and processing tax credit claims.
 

Current Law:

 New Mexico does not currently offer a tax credit specifically for foster parents. Foster care support is primarily provided through direct financial assistance and subsidies managed by the Children, Youth, and Families Department. HB 225 introduces a new financial incentive for foster families.