Tax expenditures are credits, deductions, and exemptions, which result in revenue that the state forgoes, that benefit New Mexicans – essentially investments in families, health care, and economic development delivered through the tax code rather than direct spending.
Source: New Mexico Taxation and Revenue
Images: Courtesy
SANTA FE – New Mexico delivered $1.1 billion in citizen benefit tax expenditures in Fiscal Year 2025, new data shows, accounting for the largest category of all tax expenditures at 48%.
Tax expenditures are credits, deductions, and exemptions, which result in revenue that the state forgoes, that benefit New Mexicans – essentially investments in families, health care, and economic development delivered through the tax code rather than direct spending.
The New Mexico Taxation and Revenue Department today released the 2025 Tax Expenditure Report, which estimates the amount of tax revenue foregone through these tax credits, deductions, and exemptions.
That work, under the Lujan Grisham administration, has helped move thousands of families out of poverty.
“Taxation and Revenue is incredibly proud to release the 2025 Tax Expenditure Report, which highlights New Mexico’s commitment to improve the lives of New Mexicans,” said Taxation and Revenue Department Secretary Stephanie Schardin Clarke.
Tax Expenditure By Category
The largest single tax expenditure in FY25 was the GRT deduction on retail food sales, which totaled $397 million.
The next largest expenditure under citizen benefits was the Child Income Tax Credit, a proven tool in fighting child poverty. The state delivered approximately $139 million to parents in FY25. This credit is up to $622 per qualifying child and was claimed by 257,526 taxpayers in FY25.
Health care was the second-largest tax expenditure category, totaling $743 million – or 32% – in tax expenditures.
The highest expenditure in the health care share was the GRT deduction on prescription drugs, oxygen, and medical cannabis, totaling $275 million. That’s also the second largest of all tax expenditures.
Other tax expenditure share benefits go toward economic development, highly specialized industries, and environment, conservation and renewable energy.
The 2025 Tax Expenditure Report also notes that some current expenditures are set to sunset within five years, including liquor license lessor and holder deductions, the high-wage jobs credit, and the technology readiness credit. New Mexico has 149 tax expenditures, nine of which are new to this year’s report.
To view the full report, visit Taxation and Revenue’s online Forms & Publications page. The report can be found by selecting the “Publications” folder, then selecting the “Tax Expenditure Reports” folder, then selecting “2025 NM Tax & Rev Tax Expenditure Report.”
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