New Mexico took another step toward becoming the next state to eliminate personal taxes on most Social Security benefits after legislators last week moved a bill on the proposal to its final committee.

                By                    Vance Cariaga

See: Social Security Benefit Taxes — Could New Mexico Phase Them Out Thanks to Competing Bills?Find: All the States That Don’t Tax Social Security

The bill, called SB108, was one of several introduced during the current session that seek to exempt Social Security benefits from personal income taxes, the Las Cruces Sun-News reported. SB108 has bipartisan support as well as the backing of Gov. Michelle Lujan Grisham. As of Friday, Feb. 11, the bill was being reviewed by the state Senate’s Tax, Business and Transportation Committee.

“It’s high time that we eliminate the tax on Social Security,” state Sen. Michael Padilla, SB 108’s Democratic co-sponsor, told the Las Cruces Sun-News. “We’re one of only 12 states remaining that still tax Social Security. This is an issue that has faced a lot of New Mexico families in retirement.”

If the bill becomes law, the tax exemption on Social Security income would take effect in the current tax year. It wouldn’t be available to everyone, however. The bill caps the exemption at $75,000 for married couples filing separately, $150,000 for married couples filing jointly and $100,000 for individuals, which means New Mexico would still tax Social Security benefits for some residents. 

See: Social Security — Benefit Recipients Should Know About These Two Credits This Tax SeasonFind: Tax The Rich — Dropping the Taxable Earnings Base Just Might Save Social Security

According to Kiplinger, the other states besides New Mexico that tax Social Security benefits are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, Rhode Island, Utah, Vermont and West Virginia.

Proponents of eliminating the tax say doing so will help New Mexico attract more retirees who want to relocate to Sunbelt states — nearly all of which don’t impose a tax on Social Security benefits.

See: With A Recession Looming, Take These 3 Retirement Moves To Stay On Track

  • Dollar Tree: 5 High-Quality Items To Buy NowDo You Have a Tax Question? Ask a Tax ProThe 10 Best Cash Back Credit Cards for 20236 Reasons Why You Shouldn’t Procrastinate on Your Taxes