In a pivotal discussion at the New Mexico Legislature's Taxation and Revenue Committee meeting on February 26, 2025, the taxation of Social Security benefits emerged as a hot-button issue, with strong support for reform aimed at attracting retirees to the state. Carla Sonntag, president and CEO of the New Mexico Business Coalition, passionately advocated for eliminating the state tax on Social Security, arguing that it is unfair to tax benefits that individuals have already contributed to during their working years. Sonntag emphasized that only nine states currently impose such a tax, and New Mexico's ranking in tax policy has dropped from 29th to 38th in recent years, highlighting the need for change to remain competitive.

Several committee members echoed Sonntag's sentiments, with Representative Azas expressing a desire to remove New Mexico from the list of states taxing Social Security, while Representative Montoya called for serious consideration of the issue in future budget discussions. He pointed out that taxing Social Security undermines fairness, especially for those who have paid into the system without an opt-out option.

However, not all voices were in favor of the proposed changes. Representative Silva raised concerns that the bill primarily benefits higher-income households, potentially harming lower-income families already struggling with rising costs. She suggested exploring more equitable tax policies that do not disproportionately favor wealthier individuals.

Despite the mixed opinions, the committee recognized the importance of the discussion, with several members advocating for a reevaluation of New Mexico's tax policies to foster a more attractive environment for retirees. As the committee prepares to table the bill for further consideration, the debate over Social Security taxation is set to continue, with implications for the state's economic future and its ability to retain and attract residents.