The State of New Mexico and the Albuquerque metro area have a favorable tax environment and aggressive incentives to promote the relocation and expansion of business. Governor Susana Martinez signed into law major changes to New Mexico's corporate income tax structure brought about by the 2013 Legislative session.
- An optional single sales factor for manufacturers. We are now on path for a five year phase-in to 1000% This will dramatically reduce the state corporate income tax liability for most manufacturers.
- Eliminated the throwback rule, which removes a penalty to existing manufacturers and an obstacle to new investment.
- Approved a five year phased reduction of corporate income tax top rate of 7.6%, down to 5.9%
These important measures come on top of action last year by the Governor and Legislature, which approved a phase-in for the elimination of Gross Receipts Taxes being charged on consumables used in the manufacturing process, so there will no longer be GRT imposed on industrial gases or electricity, for example.
$50 annually - Each corporation engaged in business in New Mexico and submitting a corporate income tax return must pay a franchise tax.
Corporate Income Tax
Corporate income taxes "piggyback" on federal taxable income using the three factor formula: property, payroll and sales in New Mexico calculated as a percentage of the corporation’s property, payroll and sales. A corporation may select one of three methods for reporting their state corporate income tax. Separate corporate entity, combination of domestic unitary corporations or federal consolidated group.
The State of New Mexico recently approved a five year phased reduction of corporate income tax from the current top rate of 7.6%, starting in taxable year 2014. For taxable years beginning on or after January 1, 2018, the top rate will be 5.9%.
Single Sales Factor Option
Manufacturers can elect to utilize a single sales factor option for calculating corporate income tax. The State of New Mexico recently approved a five year phase-in to 100%, beginning at 50% in taxable year 2014. With this new legislation, a manufacturer corporation’s corporate income tax liability will be determined by the sales of its products within New Mexico.
- New Mexico Compensating Tax: 5.125%
- Albuquerque Metro Area Gross Receipts Tax range: 6.0625% - 7.8125%
- City of Albuquerque Gross Receipts Tax rate: 7.0%
- Gross Receipts Tax Report
Instead of a sales tax, New Mexico imposes a Gross Receipts Tax, which is a tax imposed on persons engaged in business in the state. In almost every case the business passes along the tax to the consumer, so the tax resembles a sales tax. Sales and leases of goods and other tangible property are taxable. Sales and performances of services are also taxable in New Mexico. The compensating tax (use tax) applies to purchases made outside New Mexico.
Employers must make quarterly unemployment compensation contributions. For newly located firms, the initial contribution is 2.0 percent of the employee’s Taxable Wage Base for the first four years. After the four-year period, each employer is given an experience rating, which can cause a rate to increase or decrease. The Taxable Wage Base for the year 2015 is $23,400.
In New Mexico Workers’ Compensation is privatized; thus, employers can solicit Workers’ Compensation insurance from any company authorized to provide insurance in the state. According to a 2009 study conducted by Actuarial & Technical Solutions, New Mexico manufacturers’ average workers compensation costs were 7.3 percent lower than the national average. New Mexico ranked 21st lowest in costs among 45 states evaluated (five of the 50 states are self-insured and not rated).
Employers must make quarterly payments to the Workers’ Compensation Administration totaling $4.30; $2.30 must be paid by the employer and $2.00 withheld from the employee’s wages.
Unless otherwise expressly exempt, all tangible personal and real property located within New Mexico is subject to a tax on the assessed value of property. Property is assessed by each county at the rate of 1/3 percent of value.
Property Tax Formula:
Full Value of Property x 1/3 percent = Assessed Value
Assessed Value x Mill Levy Rate / 1,000 = Taxes Due
|Nearby Metropolitan Cities||Clovis||Curry County|
|Property tax mill rate:|
|Gross receipt sales tax||7.8125%||5.8750%|
Source: Curry County Tax Assessor/NM Tax & Revenue Oct. 2012
There is no inventory tax in New Mexico.