Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for New Mexico.
June 27, 2024
New Mexico Adds New Deductions for Certain Medical and Health Services
Authored by: Courtney Easterday, MSA and Ryan Schupp
New Mexico has updated its deductions on medical services that went into effect on July 1, 2022. The changes include a deduction for health care practitioners or an association of health care practitioners to apply a deduction of the receipts for hospice or nursing home services for payments from the United States government and its agencies. Furthermore, the updates include a new deduction on receipts for a dialysis facility from the United States government and its agencies.
If you have questions about sales and use tax compliance, please reach out to a member of the Withum SALT Team.
April 12, 2024
New Mexico to Introduce New Deductions Effective July 1, 2024
Authored by:Emilia Jarrin and Penny Sweeting, CPA
On March 6, Governor Grisham signed a tax bill, HB 252 (Ch. 67) enacting changes to the Corporate Income Tax, Individual Income Tax, and Gross Receipts and Compensating Tax. The enacted changes, which become effective July 1, 2024, include:
Corporate and Individual Income Tax Credit and Incentives:
- New advanced energy equipment corporate and individual income tax credit.
- Geothermal heat pump and electricity credits.
- An increase in the special-needs adopted child tax credit.
- An income tax deduction for teachers who purchase classroom supplies.
In addition, there will now be six (6) individual income tax brackets (previously, there were five (5)), with rates ranging from 1.5% to 5.9%.
Gross Receipts and Compensating Tax Deductions:
- Gross Receipt Tax deduction of sales of wind and solar generation and energy storage equipment to governments.
- Gross Receipt Tax deduction for childcare services.
- A credit for the sale and use of dyed special fuels for agricultural purposes.
If you have questions about how state legislative changes affect your business, please reach out to the Withum SALT Team.
October 13, 2023
New Mexico Digital Advertising Tax Hearing on November 9, 2023
Authored by: Brandon Spinella and Katie Szymanski Nguyen, CPA
The New Mexico Taxation and Revenue Department will hold a public hearing on November 9, 2023. During this hearing, the Department will hear comments from the public on the Department’s proposed digital advertising tax. Under the proposed rule, digital advertising that can be accessed from a phone, computer, or an internet-connected device in New Mexico is subject to the state’s gross receipts tax.
New Mexico is the second state to adopt a digital advertising tax after Maryland.The constitutionality of the Maryland digital advertising tax is currently being litigated. Lower-level courts have determined that the Maryland digital advertising tax violates the First Amendment, ITFA, and the dormant commerce clause. Litigation over the constitutionality of the tax is ongoing.
If you have questions about digital advertising taxes, please reach out to a member of the Withum SALT Team.
September 27, 2023
New Mexico Department of Revenue Releases Solar Energy Gross Receipts Tax Deduction Form
Authored by: Bonnie Susmano, JD, MBA and Katerine Velasquez
On September 15, the New Mexico Taxation and Revenue Department issued the Solar Energy System Gross Receipts Tax Deduction Purchase and Use Statement, Form RPD-41341, along with affiliated instructions. New Mexico taxpayers may use this form to claim a gross receipts tax deduction on the qualified purchase and installation of solar energy systems.
If you have questions about state tax benefits for green energy purchases, please reach out to a member of the Withum SALT Team.
March 18, 2022
New Mexico – GRT Rates Cut/Income and Franchise Tax Relief
On March 8th, 2022, in addition to enacting its own version of a pass-through entity tax, New Mexico legislation enacted a tax rate reduction on gross receipts (aka New Mexico sales tax). The bill is set to reduce GRT rate from 5.125% to 5% on July 1, 2022, and to 4.875% on July 1, 2023. The bill will also allow GRT exemptions for enumerated business-to-business services provided to a manufacturer for: accounting services, engineering services, financial management services, IT services, HR services, legal services, and temporary services. The legislative intent is to eliminate “GRT stacking” on manufacturers (i.e., manufacturers need to recoup their costs of GRT paid on professional services via charging higher prices on their products). Of course, the “GRT stacking” issue applies to all businesses, and it will be interesting to see if NM extends the same exemption to other business taxpayers voluntarily. Alternatively, New Mexico could be forced to put all businesses on equal footing via litigation.
The bill will also allow a GRT exemption for female hygiene products effective July 1, 2022.
March 11, 2022
New Mexico is Latest State that Enacts SALT Workaround Bill
The New Mexico Governor signed legislation on March 8, 2022, enacting a pass-through entity tax, often referred to as a SALT Workaround. The New Mexico pass-through entity tax is effective for the 2022 tax year. The legislation is akin to workarounds passed in numerous other states since the passage of the Tax Cuts and Jobs Act (TCJA) that was signed into law in late 2017. In essence, it would allow owners of passthrough entities to sidestep the $10,000 Federal SALT deduction cap imposed by the TCJA, permitting passthrough entities to elect to pay the state tax on their income at the entity level, while the owners of electing entities receive a state income tax offset. Businesses should weigh the potential benefits along with the risks in determining if a state pass-through entity tax election is the right course of action. As a number of different factors will play a role in businesses considering making elections into entity-level taxes, it is crucial all of the factors are modeled out. We expect New Mexico to release more guidance on this recently enacted SALT Workaround in the coming weeks and months ahead.
February 25, 2022
New Mexico Lawmakers Approve SALT Deductions for Pass-Through Entities and Lower the Gross Receipt Tax Rate
Recently, the House of Representatives and the Senate passed two bills, H.B.102 and H.B.163. H.B.102 allows pass-through entities to deduct taxable income at the entity level. This would allow the pass-through entities the ability to elect to pay income tax at the entity level. The state entity-level tax works as a workaround because the $10,000 SALT cap is imposed only individual income tax purposes.
In addition, H.B.163 would allow New Mexico to temporarily lower its tax rate from 5.125% to 5%. In 2023, lawmakers plan to reduce the rate to approximately 4.875%. These changes in tax rates are from the Govern Michelle Lujan Grisham’s effort to lower state taxes.
Additionally, the bill would provide a child credit of $175 dollars, a $1,000 tax credit to New Mexico nurses, and exempt feminine hygiene products from sales tax. Finally, the bill exempts social security income from tax for individuals who earn up to $100,000 or married couples filing joint returns who earn up to $150,000.
February 8, 2022
New Mexico Releases Automated Tools for Reporting Gross Receipts Tax
New Mexico released two new tools that will allow businesses to comply with the destination sourcing rules for Gross Receipts Tax that are particularly useful to remote sellers, but these tools are available to all businesses making NM sourced sale. The first tool is an application programming interface that will automate matching an address to the Gross Receipts Tax location code. The second tool is web-based application that allows the user to upload a bulk file of sales addresses, and the tool will match the addresses to the corresponding Gross Receipts Tax location code
July 22, 2021
New Mexico Issues Publication on New Gross Receipt Tax Sourcing Method
New Mexico has issued a publication (FYI-200) regarding updated sourcing rules. The publication provides explanation and some examples to help taxpayer understand how the new rules might apply. Under the new rules, most New Mexico-based businesses pay the Gross Receipts Tax rate in effect where their goods or the products of their services are delivered. This “destination” sourcing method was mandated by legislation adopted in 2019 and 2020. This also allows the state to tax out-of-state internet-based businesses.
The rules for service providers are complex but they are summarized below:
| Type of Receipts | Impact of 7/1/2021 Change in Law |
| General Services, In Person Professional Services and Tangible Personal Property (Goods) | Change from Origin to Destination Based |
| Professional Services that require an advanced degree or a license from the state to perform (when not in-person) | No Change – Remain Origin Based |
| Construction Services and Real Estate Commissions | No Change – Remain Destination Based |
March 23, 2021
New Mexico Update on Extension of Filing Deadline
The New Mexico Taxation and Revenue Department has announced it will extend the deadline for filing and paying 2020 New Mexico personal income taxes until May 17, 2021 in accordance with the announced federal extension. ( Personal Income Tax deadline extended until May 17, 03/18/2021 .)
March 3, 2021
New Mexico Effectuating a four-month “tax holiday” for businesses and restaurants
The Senate Bill passed last week, would create a four-month gross receipts tax deduction for several types of businesses on their sales of food and non-packaged beverages. Individuals earning up to $31,200 and joint filers earning up to $39,000 would also receive a $600 tax credit for the 2020 tax year.
April 1, 2020
Personal and Corporate Deadline
The personal and corporate tax filing deadline has been extended to July 15, 2020, including quarterly personal income tax estimated payments. The filing and paying of withholding tax has been extended to July 25, 2020 for those returns and payments originally due between March 25, 2020 and July 25 2020.
More on Taxes and the Coronavirus Pandemic.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
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The State and Local Tax (SALT) laws vary from state to state and are constantly changing. Reach out to Withum’s SALT Team for guidance on how to navigate your state’s local tax laws.
