It was unanimous—68-0 in the New Mexico House of Representatives, 28-0 in the New Mexico Senate.

If Gov. Michelle Lujan Grisham signs House Bill 102 into law, New Mexico’s small businesses organized as S-corps, partnerships, and LLCs will have gained some tax relief from the SALT cap placed on them by federal law.

As explained in the legislative analysis of HB 102 (bolded text added), “A major component of the 2017 Tax Cuts and Jobs Act (TCJA) was the $10 thousand limit on the amount of state and local taxes (SALT cap) an individual may deduct for regular federal income tax purposes. Currently, individual owners of pass-through entities (PTEs) report their proportionate share of business income on their individual income tax returns and are subject to the $10 thousand annual limit for state and local income taxes paid.

“These PTEs include S corporations, partnerships, limited partnerships, limited liability partnerships (LLPs), and limited liability companies (LLCs). The bill provides a way for pass-through entities to avoid the effect of the SALT cap by allowing direct taxation at the entity level under the proposed entity-level tax, instead of taxing the individual to whom the income is otherwise passed through under the Income Tax Act or the Corporate Income Tax Act. Under the proposed bill, pass-through entity taxpayers can elect to pay state income taxes at the entity-level rather than on the personal income tax returns of the individual partners and owners. They can then deduct the full amount of the entity-level tax from their federal income taxes. The state entity-level tax works because the SALT cap is applicable for only individual income tax purposes and does not apply to pass-through entities.”

Jason Espinoza, NFIB New Mexico’s state director who lobbied extensively for HB 102, called it a great day for bipartisanship. “Sponsored by Democrat Micaela Lara Cadena and Republican Jason Harper, passage of HB 102 shows both sides of the political aisle can come together for the common good of all New Mexicans. I also want to single out for special thanks NFIB Leadership Council member John Chavez for helping draft the bill and testifying on behalf of it. Nobody speaks with more credibility on small-business issues than a small-business owner, and it was because of John’s involvement with HB 102 that it succeeded so well. He also showed the importance of our Leadership Council in advancing an agenda beneficial for New Mexico’s Main Street enterprises.”