Summary:

 Senate Bill 184 (SB 184) eliminates the income cap on the Social Security income tax exemption, allowing all taxpayers to fully exempt Social Security income from state taxation regardless of their adjusted gross income. The bill applies to taxable years beginning on or after January 1, 2025. 

Legislation Overview:

 Senate Bill 184 (SB 184) proposes to amend Section 7-2-5.14 NMSA 1978 to remove the existing income thresholds that currently limit eligibility for the Social Security income tax exemption. Under current law, individuals with an adjusted gross income exceeding certain limits are ineligible for the exemption. The bill eliminates these restrictions, ensuring that all Social Security income reported under Section 86 of the Internal Revenue Code is fully exempt from New Mexico state income tax. The exemption amount may not exceed an individual's net income, meaning that it cannot be used to reduce tax liability below zero or create a refund beyond what was paid.

Implications
SB 184 is expected to reduce state income tax revenues by extending the exemption to all Social Security recipients regardless of income. The fiscal impact will depend on the number of taxpayers who qualify under the new provision, but it will primarily benefit higher-income individuals who were previously ineligible. The change simplifies tax administration by removing the need to verify income thresholds for eligibility. 

Current Law:

 Under current law, the Social Security income exemption is limited to taxpayers with adjusted gross incomes below $75,000 for married individuals filing separately, $150,000 for married individuals filing jointly and heads of household, and $100,000 for single filers. SB 184 removes these caps, allowing all Social Security income to be fully exempt regardless of total income.