Poverty fell more than a third in New Mexico due to tax changes, but there’s more to do

Thousands of people waited in line for groceries at a Roadrunner Food Bank distribution event on Dec. 19, 2025 in Albuquerque. Image by Ted Alcorn.

By Ted Alcorn, New Mexico In Depth 
New Mexico In Depth

The first cars arrived before dawn. By 9 a.m., vehicles snaked through the food distribution event at the state fairgrounds in Albuquerque. It was a week before Christmas, and thousands of families would come for groceries to get them through the holidays.

The scene is a familiar one in New Mexico, where many people lack adequate food, let alone secure housing,  affordable healthcare, and fair-paying jobs.

But by the numbers, so gradual it’s difficult to detect, changes to state tax policy are softening the bite of poverty. 

Federal data released last fall show that, after accounting for government benefits, over the last decade the share of New Mexicans experiencing poverty declined more than in almost any other state.

That coincides with a period in which state lawmakers significantly altered tax rates to reduce the burden on low-income residents. They enacted and expanded tax credits and rebates that annually return hundreds of millions of dollars to working families. And they instituted other benefits including a constitutional right to early childhood education.

The changes have vaulted the state’s tax structure from one of the most regressive in the country, where lower-income people paid a bigger share of their incomes in taxes than the wealthiest, to among the most progressive, where the poorest residents now pay a lower share of their income in taxes than any other group.

The policy changes have caught the attention of poverty experts around the country, who say they are having a profound impact.

“The state tax system is a powerful tool,” emailed Arloc Sherman, a vice president at the Washington, D.C.-based Center on Budget and Policy Priorities, “and New Mexico in recent years has been a leader in using it to help keep more families above the poverty line.”

Improvements in the state’s poverty ranking don’t help pay the rent or put food on the table for every resident who is still in need. But in an interview, House Speaker Javier Martinez, D-Albuquerque, said that only sharpens his motivation to tackle poverty during this year’s session. “As long as I’m Speaker, this is going to be a top priority for me.”

Kim Obregon was just a few blocks away from the food distribution, in Albuquerque’s international district, but she couldn’t afford to wait in line because she was at work.
She’d spent years as an educator and then during the pandemic, when she found she couldn’t juggle teaching and taking care of her own kids, she started Mustard Seed Flowers. But she’s struggled to get the business off the ground.

She was displaced from a previous location after an electrical fire broke out in an attached unit. A city inspector found the building was hazardously wired and ordered it vacated. When she finally found a new space, she tried to make the most of it by inviting a local artist to decorate the walls with vivid murals of sunflowers and lisianthus. And to appeal to kids walking home from school, she added a candy section. But that December morning, only one customer browsed the offerings.

“I have set a deadline that if I’m not able to really survive and cover all of our financial needs by summertime, I’m going to close up,” Obregon said.

As a working parent earning less than $30,000 a year — about half the median household income statewide — she lives below the poverty line. Historically in New Mexico, that is commonplace. As of a decade ago, the state had the highest poverty rate in the country: 22% of residents earned less than the official poverty line, according to surveys conducted by the U.S. Census between 2013 and 2015.

By the government’s “supplemental” poverty measure, which many experts say is superior because it adjusts for the local cost of living and takes into account government benefits people receive, the state was not much better-off: 17.1% of residents still fell below that threshold, higher than all but four other states.

But in the years since, there’s been a substantial change.

The share of the population earning more than the official poverty line has only declined a few percent, but the share below the “supplemental” poverty threshold has fallen by more than a third, to 10.9%. That amounts to 120,000 fewer New Mexicans experiencing deprivation. And it’s a larger decline in percentage than almost any other state.

The share of New Mexicans with incomes below the official poverty measure has declined modestly since 2013 but the supplemental poverty measure, which accounts for government benefits, has fallen much further: from 17.1% to 10.9%.

Two factors are crucial to understanding how that occurred.

In 2017, a boom in oil and gas production kicked off in southeastern New Mexico, gifting the state with successive record-setting budget surpluses.

And riding a wave of antipathy towards the first Trump administration, a slate of progressive state legislators won office in 2018, including an unprecedented number of women. That shifted the balance of power in the statehouse leftward, and the legislature began making numerous changes to lower taxes and increase benefits for poor people, particularly those with children.

​In the legislative session the following year, lawmakers began reordering the tax system to shift the burden from poorer residents to the wealthiest ones. A bill co-sponsored by then-vice chair of the tax committee Rep. Javier Martinez also raised the amount returned to low-income working parents through the Working Families Tax Credit.
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In an op-ed published that summer, after the bill’s passage, he characterized it as “the first step in a multi-faceted approach to overhaul our outdated tax system.”

In 2021, legislators further increased the value of the Working Families Tax Credit. They also increased the amount of money returned to filers through the Low-Income Comprehensive Tax Rebate, and broadened the group eligible to receive it. Voters passed a constitutional amendment guaranteeing residents early childhood education.

In 2022, legislators exempted Social Security income from taxes, issued across-the-board tax rebate checks, and enacted a new Child Tax Credit, which has since been expanded to $600 a year per child. (It is also “refundable,” meaning even eligible people who earn too little to owe any taxes still get the money.)

And in 2023, they again revised income tax rates and lowered the gross receipts tax, which disproportionately burdens poor New Mexicans.  

Together, these laws amount to a sea-change in how the state collects taxes from its residents. 
In a report published by the non-profit Institute on Taxation and Economic Policy in 2015, New Mexico had the 33th most progressive tax structure in the country. The poorest 20% of filers were taxed more than double the share of their income as filers in the top 1%. 

By 2024, New Mexico had jumped 25 rankings to the 8th most progressive spot. The poorest 20% of filers pay a lower share of their income in taxes than any other group. 
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“No state has in recent years been more aggressive in using the tax code to boost the prospects of the lowest-income earners,” emailed Jon Whiten, the institute’s deputy director.

According to experts who analyzed the U.S. Census data on the request of New Mexico In Depth, those changes in tax and fiscal policy deserve credit for the decline in the state’s supplemental poverty rate. 

Danielle Wilson, a researcher at the Center on Poverty and Social Policy at Columbia University, said she is “confident” that without even a handful of the policies — the Working Families Tax Credit, the Child Tax Credit, and tax rebates — poverty in New Mexico in 2022 would have been about 25% higher than it was otherwise. And her analysis does not take into account the change in income and gross receipts tax rates. 

“The decline in poverty in New Mexico in recent years is meaningful, and is driven in part by the tax policies that the state chose to implement,” she emailed. 

Some local analysts have been more cautious in drawing conclusions. In a report issued in 2023, the Legislative Finance Committee, which provides the state legislature with non-partisan fiscal analysis, downplayed the importance of a decline in the supplemental poverty measure, in part because it is the product of government programs rather than increases in household income. 
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“Benefits provide assistance but do not lift families out of systemic poverty,” the report read. It touted education and training programs to increase labor force participation, where New Mexico lags at 57.6% in November 2024 compared to 62.5% nationally. 

Minority floor leader Sen. William Sharer, R-Farmington, went further, arguing that benefits undercut true prosperity if they deprived people of the impetus to work. “Giving people supplemental support actually steals that much-needed stress, that sense of purpose,” he wrote in an email. 

Rep. Christine Chandler, D-Los Alamos, who was among the class of lawmakers first elected in 2019, and co-sponsored several of the pieces of legislation, disagreed. “You can’t be a productive member of society if you’re worried about whether you can feed your child, or whether your child is going to go hungry, or whether you can pay for the child’s medical bills.”

Kim Obregon works in her shop, Mustard Seed Flowers, in December 2025. Image by Ted Alcorn

Whether lower-income New Mexicans are feeling these changes is another matter. 

Jeffrey Ledbetter supervises the tax preparation for about 10,000 lower-income families each year, as director of Tax Help New Mexico. “I see the positive effects of the changes that have been made,” he said, but many clients “don’t feel that way.”

That blind-spot isn’t unique to low-income filers. “You, me, most everybody who ever does their taxes has no idea what’s in them,” he said. Eligible low-income filers receive the new and expanded tax credits whether or not they are aware of them, but the impact of any particular credit is often obscured by other taxes the person owes, or other credits they receive. 

Obregon’s income makes her eligible for all of the major tax credits New Mexico has enacted in the last five years. She specifically recalled receiving the federal Child Tax Credit a couple years ago, when it was increased, but drew a blank on the others. “I can’t honestly say whether or not the tax credits have been helpful,” she said. 

Any improvements in state tax policy have paled against the cost of housing, she said.

According to the Federal Housing Finance Agency, in the last five years the price of single-family homes in New Mexico has risen by 56%. 

Obregon says she spends about half her income on a 900-square-foot apartment, where she’s raising seven kids: four boys in one bedroom and three girls in another. “We just keep it pared down to the absolute essentials,” she said. “I’m not really utilizing any of the community programs like Toys for Tots because we may end up with toys that we do not have space to keep.”

Her outlook is also skewed by dysfunction in her neighborhood, she said. In separate incidents in late 2023, someone smashed the window of her delivery vehicle and three of her shop windows, and she had to spend $2,500 in profit from the busy holiday season on replacing them. “There’s so many people on the streets now,” she said. “It’s hard for me to see past that.”

Speaker Martinez said there is work still to be done. A change in the state’s poverty ranking “doesn’t mean that our problems are solved.” But he argued that Democrats’ legislative agenda this year, including a program to start savings accounts for every New Mexican at birth (colloquially known as baby bonds), was poised to help. 

Lawmakers are also pursuing a bill that would double the Child Tax Credit for people with children under six. And Martinez said his colleagues will renew efforts to create a paid family and medical leave program, which narrowly failed last session, if they can find the necessary compromises to win passage. 
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“We are up against 500 years of policies that never took our communities into account,” he said, “and now that folks like me are in positions to make things happen, we’re not going to waste our opportunity.”