Taxation in New Mexico 

The tax environment in Santa Teresa is supportive to business. Taxes are low and many exemptions, credits and incentives exist within New Mexico’s tax laws. Taxes and fees affecting commercial operations in Santa Teresa include the Corporate Income Tax, the Gross Receipts and Compensating Tax, Property Tax, the Franchise Fee and Unemployment Insurance Tax. Taxes affecting individual residents of New Mexico are the Property Tax and the Personal Income Tax.

Corporate Income Tax

Corporate Income Tax in New Mexico applies to all corporations conducting business in the state. The tax also applies to nonprofit corporations and does not apply to insurance companies.

Corporate Income Tax in New Mexico is low when compared to that of other states.
A corporation operating in New Mexico can choose one of two methods for the purpose of calculating Corporate Income Tax. The first method allows corporate income tax liability to be calculated by applying the tax rate to federal taxable income, then apportioning the tax by taking the New Mexico portion of plant, payroll and sales and dividing the sum of the factors by three. The other option allows a corporation to elect to take the New Mexico portion of plant, payroll, and sales using a formula which counts the sales factor twice while dividing the sum of the factors by four. The double-weighted sales method provides a benefit to corporations who have a significant investment in plant and payroll in New Mexico but sell most of their products outside of the state. 

Gross Receipts and Compensating Tax

The Gross Receipts Tax is a tax on the vendor imposed on selling property, leasing property and performing services in New Mexico. It is also imposed on research and development services performed out of state but initially used in New Mexico. Compensating Tax is imposed on the use, consumption or storage of tangible property in the state, and on certain services. Gross Receipts and Compensating Tax in Santa Teresa is 5.8125%.

Sales of raw materials to manufacturers for use in the manufacturing process are deductible for purposes of the Gross Receipts Tax. 

Property Tax

Property Tax in New Mexico is assessed on residential and nonresidential property. It is assessed on 1/3 of the value of property (except oil and gas), and is payable to the county treasurer in two installments on November 5 and April 5.  Houses and the land on which they are constructed are subject to Residential Property Tax. Tangible personal property used or maintained by a person for purposes of that person’s trade or business is subject to nonresidential property taxation.  The Residential Property Tax rate in Santa Teresa is 0.028408. The Nonresidential Property Tax rate in Santa Teresa is 0.032567.  Tax liability is determined by dividing the assessed value of property by three, then multiplying by the tax rate.  Property values in New Mexico are assessed each year. 

Franchise Tax

Each corporation engaging in business in New Mexico and submitting a Corporate Income Tax return is required to pay a Franchise Tax of $50 per year.

Unemployment Insurance Tax

Unemployment Insurance Tax in New Mexico is 2.7% of up to the first $14,800 of compensation paid to each employee for the first four years.  After four years the rate is adjusted up or down based on experience.  All firms with at least one employee (except certain agricultural and domestic employees) are subject to Unemployment Insurance Tax and make quarterly unemployment compensation contributions according to a contribution rate schedule furnished by the Employment Security Division of the New Mexico Department of Labor.

Workers’ Compensation

According to a 1995 study by Conning and Co. of Hartford, CT, New Mexico is among the best performing states in the nation when comparing direct loss ratios. The ratio is based on business written in the state divided by the premium, and at 28.8% was the lowest in the United States in the year of the study.  Ratios in other states reached as high as 98.6% that year.  A great deal of effort has been put into providing fair coverage for injured workers without burdening employers with exorbitant workers’ compensation premiums.  

Personal Income Tax

In a 1989 study conducted by the US Department of Commerce, New Mexico was among fifteen states with individual income tax collections lower than the national average.  The tax is imposed on the net income of all New Mexico residents as well as on the net income of nonresidents with income from business, property or employment in the state. Net income is considered federal adjusted gross income plus interest earned from investments in bonds issued by other states.  Personal Income Tax rates range from a low of 1.8% to a high of 8.5% for married individuals earning over $64,000 per year.