2025 New Mexico Statutes
Chapter 7 - Taxation
Article 2 - Income Tax General Provisions
Section 7-2-34 - Deduction; net capital gain income.
A. A taxpayer may claim a deduction from net income in an amount equal to the greater of:
(1) the taxpayer's net capital gain income for the taxable year for which the deduction is being claimed, but not to exceed two thousand five hundred dollars ($2,500); or
(2) forty percent of up to one million dollars ($1,000,000) of the taxpayer's net capital gain income from the sale of a business that is allocated or apportioned to New Mexico pursuant to Section 7-2-11 NMSA 1978 for the taxable year for which the deduction is being claimed.
B. 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 deduction provided by this section that would have been allowed on the joint return.
C. As used in this section, "net capital gain" means "net capital gain" as defined in Section 1222 (11) of the Internal Revenue Code.
History: Laws 1999, ch. 205, § 1; 2003, ch. 2, § 7; 2019, ch. 270, § 14; 2024, ch. 67, § 8.
ANNOTATIONSCross references. — For Section 1222(11) of the Internal Revenue Code, see 26 U.S.C. § 1222.
The 2024 amendment, effective January 1, 2025, limited the capital gains deduction to twenty-five hundred dollars; in Subsection A, in the introductory clause, deleted "Except as provided in Subsection C of this section", in Paragraph A(1), after "not to exceed", changed "one thousand dollars ($1,000)" to "two thousand five hundred dollars ($2,500)", and in Paragraph A(2), after "forty percent", added "of up to one million dollars ($1,000,000)", and after "capital gain income", added "from the sale of a business that is allocated or apportioned to New Mexico pursuant to Section 7-2-11 NMSA 1978"; and deleted former Subsection C and redesignated former Subsection D as Subsection C.
Applicability. — Laws 2024, ch. 67, § 42 provided that the provisions of Laws 2024, ch. 67, §§ 5, 8, 10 and 32 through 37 apply to taxable years beginning on or after January 1, 2025.
The 2019 amendment, effective June 14, 2019, reduced the capital gains deduction from fifty percent to forty percent of the taxpayer's net capital gain income for the taxable year for which the deduction is being claimed; in Subsection A, Paragraph A(2), deleted "the following percentage" and added "forty percent", and deleted former Subparagraphs A(2)(a) through A(2)(e); and in Subsection B, deleted "A husband and wife" and added "Married individuals".
Temporary provisions. — Laws 2019, ch. 270, § 55, provided that a taxpayer who paid income tax for taxable year 2019 in installments through withholding or estimated tax payments pursuant to Section 7-2-12.2 NMSA 1978 but underpaid due to the changes made to Section 7-2-34 NMSA 1978 pursuant to this act shall not be subject to penalties and interest provisions of the Tax Administration Act for the underpayment; provided that the underpayment is solely attributable to the changes made to Section 7-2-34 NMSA 1978 pursuant to this act.
The 2003 amendment, effective June 20, 2003, in Subsection A, inserted "the greater of:" and the end, added the Paragraph A(1) designation, added Paragraph A(2); added the Subsection B designation and redesignated the remaining subsections accordingly.
