The state of New Mexico has distributed $132 million to 239,000 households through its new Child Tax Credit (CTC) this year. This initiative is part of a broader effort by the state to implement, increase, or expand tax credits aimed at assisting low-income residents. The information is detailed in a report titled "How Tax Credits Impact Child Poverty and Well-being," released by New Mexico Voices for Children.
Gabrielle Uballez, executive director of New Mexico Voices for Children, said, "We’ve long known that refundable tax credits are one of the most effective ways to fight poverty because they return money directly to families who know best how to address their family’s specific needs." She added that New Mexico now ranks ninth in the nation for tax fairness.
The CTC reduced the tax burden for families with personal income taxes due and provided checks to those without tax liabilities, as it is refundable. The credit was designed to benefit the lowest-income families most significantly.
On a federal level, the Earned Income Tax Credit (EITC) and CTC are significant aids for working families with low incomes. These credits helped lift 6.4 million people out of poverty nationwide in 2023. In New Mexico alone, over 450,000 children benefited from the federal CTC expansion during the pandemic.
New Mexico also offers a state-level EITC called the Working Families Tax Credit (WFTC), which returned $123 million to 196,000 households in 2023. Additionally, the Low-Income Comprehensive Tax Credit (LICTR) provided $44 million to 305,000 households that year.
Uballez highlighted research indicating that these tax credits not only reduce child poverty but also lead to improved health outcomes and higher earnings in adulthood. "The EITC also improves school performance and increases college attendance rates," she noted.
State and federal tax credits have contributed to New Mexico's child poverty rate being below the national average when measured using the supplemental poverty measure (SPM). According to SPM data from 2021-2023, child poverty in New Mexico is under 9%, compared to a national average of 10%.
The full report on how tax credits impact child poverty can be downloaded from New Mexico Voices for Children's website.
