Donors could claim tax credits for private-school scholarships

The Public Education Department may authorize New Mexico nonprofit organizations to award scholarships for private-school tuition. Students must live in New Mexico, meet the income limit tied to reduced-price school lunches, and have attended a New Mexico public school or qualifying home school full time for at least one semester before transferring. Organizations must use at least 90 percent of contribution revenue for scholarships, make scholarships available across schools, and prevent donors from choosing recipients. A student who receives a scholarship and continues at the private school remains eligible despite later household income changes, until graduating or turning 21.

The department may allow individual taxpayers a credit for contributions to an authorized scholarship organization. The credit is for a contribution to a school tuition organization authorized under the bill. The taxpayer cannot be someone else's dependent, and the contribution must be certified. The credit cannot exceed $700 for single or separate filers or $1,400 for the other listed filing statuses; any amount beyond tax owed is not refunded. The credit would apply to tax years starting on or after January 1, 2026. Donors must apply within 12 months after the contribution's calendar year; unused credit may carry forward for three consecutive tax years. Credit limits would adjust for inflation starting in 2027.

The department may allow a corporate income tax credit for contributions to an authorized scholarship organization. A taxpayer subject to the Corporate Income and Franchise Tax Act could claim the credit for a contribution to a school tuition organization authorized under the bill. The contribution must be certified. The credit cannot exceed $1,400, and any amount beyond tax owed is not refunded. The credit would apply to tax years starting on or after January 1, 2026. Taxpayers must apply within 12 months after the contribution's calendar year; unused credit may carry forward for three consecutive tax years. The limit would adjust for inflation starting in 2027.