Competitive Business Climate

Since taking office in January 2011, Governor Martinez has worked with the New Mexico Legislature to enact significant changes to State tax policy. In January 2014 she was 1 of 6 governors recognized by the nonpartisan Tax Foundation for Outstanding Achievement in State Tax Reform.

The 2013 New Mexico Jobs Package phases in a reduced corporate income tax rate from 7.6% to a maximum rate of 5.9% by January 1, 2018.

Corporate Income Tax Reduction Phases

Year <$500,000 $500,000 - $1 million >$1 million
2014 4.8% 6.4% 7.3%
2015 4.8% 6.4% 6.9%
2016 4.8% 6.4% 6.6%
2017 4.8% 6.2% 6.2%
2018 4.8% 5.9% 5.9%

In addition, the bill phases in a single sales factor apportionment methodology for the income of multi-state corporations, whose principal business activity is manufacturing, over the same 5-year period.

For the purposes of apportioning income, “manufacturing” excludes construction, farming, power generation, and processing natural resources including hydrocarbons.

Five-Year Policy Changes:

Apportionment Formula for Manufacturing Businesses

Year Apportionment
2014 Double-Weighted Sales
2015 Triple-Weighted Sales
2016 70% Sales
2017 80% Sales
2018 Single Sales Factor

In January 2014 Ernst & Young published a study on tax competitiveness and found that New Mexico has the best tax climate for manufacturers in the 9-state western region. Read the Ernst & Young report.

In August 2014 Kiplinger named New Mexico the 8th Most Tax Friendly State, up from 9th in 2013.