1. A. A taxpayer who files an individual New Mexico income tax return, who is not a dependent of another taxpayer and who adopts or has adopted a special needs child may claim a credit against the taxpayer's tax liability imposed pursuant to the Income Tax Act. The credit authorized pursuant to this section may be referred to as the "special needs adopted child tax credit".
2. B. A taxpayer may claim and the department may allow a special needs adopted child tax credit in the amount of one thousand five hundred dollars ($1,500) to be claimed against the taxpayer's tax liability for the taxable year imposed pursuant to the Income Tax Act.
3. C. A taxpayer may claim a special needs adopted child tax credit for each year that the child may be claimed as a dependent for federal taxation purposes by the taxpayer.
4. D. If the amount of the special needs adopted child tax credit due to the taxpayer exceeds the taxpayer's individual income tax liability, the excess shall be refunded.
5. E. Married individuals who file separate returns for a taxable year in which they could have filed a joint return may each claim only one-half of the special needs adopted child tax credit provided in this section that would have been allowed on a joint return.
6. F. A taxpayer allowed a tax credit pursuant to this section shall claim the credit on forms and in a manner required by the department.
7. G. The tax credit provided by this section shall be included in the tax expenditure budget pursuant to Section 7-1-84 NMSA 1978, including the annual aggregate cost of the tax credit.
8. H. As used in this section, "special needs adopted child" means an individual who may be over eighteen years of age and who is certified by the children, youth and families department or a licensed child placement agency as meeting the definition of a "difficult to place child" pursuant to the Adoption Act [Chapter 32A, Article 5 NMSA 1978]; provided, however, if the classification as a "difficult to place child" is based on a physical or mental impairment or an emotional disturbance the physical or mental impairment or emotional disturbance shall be at least moderately disabling.

History: Laws 2007, ch. 45, § 10; 2024, ch. 67, § 23; 2025, ch. 130, § 38.

ANNOTATIONS

The 2025 amendment, effective January 1, 2026, revised reporting requirements regarding the special needs adopted child tax credit; in Subsection F, after "shall" deleted "report the amount of the credit to the department" and added "claim the credit on forms and"; and in Subsection G, after the subsection designation, deleted most of the subsection and added "The tax credit provided by this section shall be included in the tax expenditure budget pursuant to Section 7-1-84 NMSA 1978, including the annual aggregate".

The 2024 amendment, effective May 15, 2024, increased the special needs adopted child tax credit from one thousand dollars to one thousand five hundred dollars, required the taxation and revenue department to compile an annual report on the adopted child tax credit, and made technical amendments; in Subsection B, after "in the amount of", deleted "one thousand dollars ($1,000)" and added "one thousand five hundred dollars ($1,500)"; in Subsection E, deleted "A husband and wife" and added "Married individuals"; and added new Subsections F and G and redesignated former Subsection F as Subsection H.

Applicability. — Laws 2024, ch. 67, § 42 provided that the provisions of Laws 2024, ch. 67, §§ 7, 9 and 23 through 31 apply to taxable years beginning on or after January 1, 2024.