Committee Substitute February 12, 2025 in HTRC:

HTRCcs/HGEICcs/HB47: The House Taxation and Revenue Committee Substitute for House Government, Elections and Indian Affairs Committee Substitute for House Bill 47 increases the property tax exemption available to New Mexico veterans and their surviving spouses. For tax years 2006 through 2024, the exemption amount remains at $4,000. However, for tax year 2025, the exemption increases to $10,000. Beginning in tax year 2026, the exemption will be annually adjusted for inflation based on the Consumer Price Index (CPI) to maintain its real value over time. The Department of Taxation and Revenue will publish the adjusted exemption amount annually and provide updated figures to county assessors by December 1 of each prior tax year.

HTRCcs/HGEICcs/HB47 also makes substantial changes to the disabled veteran property tax exemption. Under current law, only veterans with a 100% permanent and total service-connected disability qualify for a full property tax exemption. HTRCcs/HGEICcs/HB47 replaces this requirement with a proportional exemption based on the veteran’s disability rating. This change ensures that partially disabled veterans receive tax relief, whereas previously, only fully disabled veterans qualified.

The bill clarifies and strengthens exemption claim procedures. Veterans must apply for and receive an eligibility certificate from the Department of Veterans Services (DVS) before receiving an exemption. County assessors are required to verify eligibility annually to prevent multiple claims across different counties. HTRCcs/HGEICcs/HB47 also formalizes procedures for transferring exemptions when a disabled veteran moves to a new primary residence, allowing them to maintain their exemption without a gap in coverage.

Additionally, the bill includes penalties for fraudulent claims. Any person who intentionally claims an exemption they are not entitled to is guilty of a misdemeanor, punishable by a fine of up to $1,000. If a county assessor or staff member knowingly allows an ineligible exemption, they will also be subject to the same fine and automatic removal from office or employment upon conviction.

HTRCcs/HGEICcs/HB47 applies the updated disabled veteran exemption formula beginning in tax year 2026. The bill declares an emergency, meaning it takes immediate effect upon passage and approval.

Implications

HTRCcs/HGEICcs/HB47 provides expanded property tax relief for New Mexico veterans and their surviving spouses, particularly by increasing the general veteran exemption from $4,000 to $10,000 and indexing it to inflation to prevent erosion of its real value. This change ensures that veterans continue receiving meaningful tax relief in the face of rising property values and costs. The bill also significantly expands eligibility for the disabled veteran exemption by making it proportional to the veteran’s disability rating, a move that benefits partially disabled veterans who previously received no tax relief.

The inflation-adjusted exemption presents administrative considerations for county assessors, who must annually apply CPI adjustments published by the Department of Taxation and Revenue. While this change maintains the exemption’s effectiveness, it introduces additional complexity in tax calculations.

By requiring eligibility certification from DVS and verifying exemption claims annually, the bill reduces the risk of fraud and multiple claims in different counties. However, this may create new administrative burdens for veterans applying for the exemption, particularly for those who may not be aware of the certification requirement.

The bill’s criminal penalties for fraudulent claims reinforce compliance and accountability, but enforcement may depend on county assessors’ ability to detect fraudulent claims. The bill ensures that disabled veterans who relocate to a new home do not experience a gap in tax relief, an improvement over current law that provides no formal mechanism for exemption transfers.

The emergency clause allows immediate implementation, which benefits veterans by ensuring the higher exemption amount applies as soon as possible. However, county assessors may need additional time and guidance to implement new procedures efficiently.

Summary of Key Changes made by HTRCcs:

HTRC substitute introduces a new section to the Property Tax Code (Section 7-38-17 NMSA 1978) that governs the claiming and maintenance of property tax exemptions. This section ensures that veteran, disabled veteran, and veterans’ organization exemptions are automatically applied in future tax years unless there is a change in eligibility or property ownership. It also establishes verification measures to prevent improper claims and imposes penalties for fraudulent exemptions.

The bill revises the calculation of the disabled veteran exemption, basing it on the veteran’s percentage of service-connected disability. This change ensures that tax benefits are distributed proportionally according to the veteran’s level of disability, rather than providing a blanket exemption.

Clarifications are also made regarding exemptions for surviving spouses. The substitute retains the provision allowing a surviving spouse to continue receiving the exemption if they continuously occupy the home but specifies that the exemption amount will be based on the veteran’s disability rating.

Additionally, the bill strengthens oversight and enforcement measures. It assigns the Veterans’ Services Department responsibility for verifying exemption claims and imposes penalties for improper claims. 

Committee Substitute January 29, 2025 in HGEIC:

HGEICcs/HB 47: The House Government, Elections and Indian Affairs Committee Substitute for House Bill 47 (HB 47) amends Section 7-37-5 NMSA 1978 to increase the veteran property tax exemption from $4,000 to $10,000 for Tax Year 2025 (TY25) and introduces an annual inflation adjustment starting in TY26. The inflation adjustment will be calculated using the Consumer Price Index (CPI), with the exemption amount rounded down to the nearest $100. The New Mexico Department of Taxation and Revenue (TRD) will publish the adjusted exemption amount annually and distribute it to county assessors.

The bill also amends Section 7-37-5.1 NMSA 1978 to restructure the disabled veteran exemption. Under the new provisions, the exemption amount is no longer automatically 100% of property value for all disabled veterans. Instead, the exemption is tiered based on the veteran’s disability rating as determined by federal law, ensuring that veterans with lower disability percentages still receive some tax relief.

The bill clarifies that surviving spouses of disabled veterans can continue claiming the exemption, provided they were married to the veteran at the time of death and continue occupying the property as their primary residence. Additionally, if a disabled veteran or surviving spouse moves to a new principal residence, they may choose to either:
	1.	Retain the exemption for their previous residence for the remainder of the tax year, or
	2.	Transfer the exemption immediately to their new residence, regardless of whether the application deadline has passed.

The New Mexico Veterans’ Services Department is directed to assist in verifying eligibility for exemptions and ensuring proper coordination between veterans, county assessors, and the TRD.

The provisions apply to the 2026 and subsequent tax years, and the emergency clause ensures that these changes take effect immediately upon passage to facilitate implementation before the next property tax cycle.

Implications

HGEICcs/HB 47 will increase property tax relief for veterans and disabled veterans, particularly those who have historically been ineligible for a full exemption due to having a disability rating lower than 100%. The inflation adjustment ensures that the standard veteran exemption keeps pace with the cost of living, preventing the exemption amount from eroding over time.

The financial impact on local governments will depend on the number of veterans claiming the expanded exemption. Counties with large veteran populations may experience reduced property tax revenues, which could affect funding for public services, schools, and infrastructure. However, the inflation-adjusted exemption provides predictability in tax planning, preventing the need for frequent legislative adjustments.

The shift to a percentage-based disabled veteran exemption is expected to increase the number of eligible veterans who receive partial tax relief, benefiting those who were previously excluded due to not having a 100% service-connected disability rating. This may result in more claims being processed by county assessors, requiring additional administrative coordination between assessors, the TRD, and the Veterans’ Services Department.

The immediate effective date allows counties and tax agencies to prepare for implementation in time for the 2025 tax year, ensuring veterans can claim the increased exemption without delay.

Summary of Changes and Potential Impact
1. HGEICcs/HB 47 moves up the implementation timeline for the increased veteran exemption and inflation adjustments by one year, allowing veterans to benefit sooner.
2. It removes the expanded definition of “veteran,” keeping eligibility restricted to those who served 90 days on active duty instead of including reservists and National Guard members who served for at least six years.
3. The proportional disabled veteran exemption remains, but eligibility restrictions may limit new applicants compared to the original bill.
4. Adding an emergency clause ensures that changes take effect immediately, benefiting veterans in the upcoming TY25 rather than delaying implementation.
5. Surviving spouses receive clearer protections, ensuring their exemption transfers to a new primary residence without application deadline restrictions.