SB298 creates a new income tax exemption for certain health care practitioners who are New Mexico residents and who practice full-time in the state. For taxable years ending before January 1, 2035, eligible practitioners would not pay state income tax on income earned from providing health care services in New Mexico within the scope of their practice. The bill applies beginning with taxable years starting on or after January 1, 2025.
The bill defines “health care practitioner” broadly to include chiropractors, dentists and dental hygienists, doctors of oriental medicine, optometrists, osteopathic physicians, physical therapists, physicians and physician assistants, podiatrists, and psychologists. It also requires the tax expenditure to be included in the state’s tax expenditure budget, including the annual aggregate cost of the exemption.
Impact
SB298 would amend the New Mexico Income Tax Act by adding a new exemption for qualifying health care practitioners, reducing or eliminating state income tax liability on income earned from in-state clinical practice for the covered professions. The measure would affect both individual practitioners and state revenue, because the exemption must be tracked as a tax expenditure and would reduce income tax collections for up to ten years, through tax years ending before January 1, 2035.
Sentiment
Based on the bill text and the absence of recorded committee debate or votes, the available record suggests the bill was introduced as a pro-workforce, pro-provider tax incentive aimed at attracting and retaining health care professionals. The overall tone of the measure is supportive of health care access and provider recruitment, with no documented opposition or amendment activity in the provided materials.
Contention
The main policy issue raised by the bill is the cost of exempting a broad group of licensed practitioners from income tax, which could reduce state revenue and create a targeted tax preference for certain professions. Another possible point of contention is scope: the exemption applies only to residents who practice full-time in New Mexico and only to income derived from providing health care in the state, which may prompt questions about fairness, administrative verification, and whether the selected professions should be included or excluded. No specific objections or supporters are recorded in the provided committee materials.