Answers from the Roundhouse: Do state rebates count as taxable income?

Editor’s Note: Once a week during the legislative session, Journal Capitol Bureau reporters will answer questions posed by readers. You can submit questions at the Journal’s website: ABQJournal.com/legislature.

Q. Can somebody tell if the 2021 income tax rebate we received in 2022 is taxable income to report on New Mexico’s tax form (PIT-1) and if it must be reported on the federal 1040 form? — Robert Olesky

A: New Mexico households received up to $1,500 in state rebates last year, amid an ongoing revenue boom.

That money does not have to be reported on state tax returns, a state Taxation and Revenue Department spokesman said.

But it’s unclear whether New Mexicans will have to report it on their federal tax returns.

The federal Internal Revenue Service announced last week it was still reviewing the tax rebates and refunds issued by states — including New Mexico — last year, saying the different rules surrounding the tax rebates are complex.

With guidance from the federal tax agency expected to be released in the coming days, the IRS urged taxpayers to wait before filing their 2022 tax returns, but said taxpayers should not amend already filed returns.

Meanwhile, there could be an additional round of rebates on the way, as legislation proposing a $750 rebate for individual taxpayers — married couples filing jointly would get $1,500 checks — has already cleared one Senate committee during this year’s 60-day session.

If the bill wins final approval, those rebate checks could be sent out as soon as this spring.