Recent changes to New Mexico’s tax structure have made Albuquerque more competitive than ever for the relocation and expansion of business.
CORPORATE INCOME TAX
Manufacturers and headquarters/regional headquarters may elect the Single Sales Factor tax apportionment when computing Corporate Income Tax (CIT), wherein CIT is determined solely on revenue generated from sales within New Mexico. New Mexico enacts CIT on the net income of every domestic and foreign corporation doing business in and out of the state. The CIT is calculated as a percentage of the corporation’s property, payroll, and sales. A corporation may select one of three methods for reporting their state CIT: separate corporate entity, a combination of domestic unitary corporations or a federal consolidated group.
In New Mexico Workers’ Compensation is privatized and 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.
GROSS RECEIPTS TAX
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 gross receipts tax rate for purchases made in the metro area ranges from 6.3125 to 8.3125 percent throughout the MSA; Albuquerque’s Gross Receipts Tax rate is 7.625 percent. The compensation tax (use tax) for purchases made outside New Mexico is 5.0 percent.
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. The mill levy is dependent on the location of the property. Throughout the metro area, the non-residential mill levy rate can range anywhere from roughly 26.309 to 52.108. In the City of Albuquerque, the current non-residential mill levy rate is 47.983.
Property Tax Formula
Full Value of Property x 1/3 percent = Assessed Value
Assessed Value x Mill Levy Rate / 1,000 = Taxes Due