Committee advances bill to exempt most health-care services from New Mexico gross receipts tax

The House Health and Human Services Committee voted to advance a committee substitute to House Bill 344 that would expand New Mexico's gross receipts tax exemption to include virtually all health-care services, a change sponsors and supporters said would help recruit and retain providers.

Representative Hochman Vigil, sponsor of the bill, told the committee New Mexico is one of only a handful of states that taxes health-care services and that the existing exemption currently in place expires in 2028. The proposed change would extend and broaden the exemption. The committee substitute clarifies how Medicaid-eligible services are treated and includes hold-harmless language to address local-government revenue losses in specific instances; sponsors and stakeholders said the substitute attempts to limit fiscal harm to communities but does not fully resolve every local revenue question.

Health-care groups, hospitals, dental associations and practice networks testified in support. Tom Skripcima, executive director of the New Mexico Dental Association, said rising costs and the tax burden make New Mexico less competitive for providers. "Dental is one of those areas where... many dentists wait months for approval," he said in the earlier dental testimony and later supported HB344 on tax grounds. Fred Nathan of Think New Mexico said New Mexico lost physicians between 2019 and 2024 and identified gross receipts tax as one of three causes for provider exit; he urged the change. Troy Clark of the New Mexico Hospital Association and Jason Espinosa of the Greater Albuquerque Medical Association voiced support for the exemption as a recruitment and retention tool.

Committee members asked how the substitute protects smaller communities that currently rely on gross receipts tax revenue generated by medical services. Sponsor staff acknowledged the fiscal complexity, saying the committee substitute does not comprehensively hold every community harmless and that further work with the Association of Counties will likely be required. The sponsor also told members that Medicaid-related GRT issues are affected by existing federal funds and that Medicaid services are handled differently in fiscal calculations.

After testimony from providers and associations, committee members adopted the committee substitute and moved the bill forward. The clerk recorded the motion as a "do pass" and the committee announced the result as 8-0. No formal opposition was recorded during the hearing.

The bill will move forward from committee; sponsors and staff signaled further conversations will be needed about local revenue impacts and potential offsets.