NM tax ranking still at 34

State credited with slight improvements

New Mexico, for the third consecutive year, is ranked No. 34 in the nation for the most competitive tax code, according to the Tax Foundation’s annual ranking.

The foundation’s State Business Tax Climate Index, to be released today , takes into account more than 100 tax variables in five tax categories: corporate, individual income, sales, property and unemployment insurance. It is based on rates for the current fiscal year.

This year’s report shows New Mexico held on to its No. 1 ranking for property taxes, and it rose one notch from No. 25 to No. 24 for corporate taxes.

That improvement reflected the state’s continued phase-in of corporate tax reductions, from 6.6 percent to 6.2 percent, the study said.

Next year’s scheduled corporate tax cut, to 5.9 percent “will continue to enhance the state’s standing in comparison to its neighbors and further improve its corporate tax component score,” the report said.

While still ranked relatively low in the sales tax category, New Mexico did show some improvement. It came in at No. 40, compared to 42nd place last year. Sales tax in New Mexico is levied as a gross receipts tax on business activity.

For individual income taxes, New Mexico continued to be ranked at No. 35.

The top three states for overall business tax climate were, in order, Wyoming, South Dakota and Alaska. The worst was New Jersey, followed by New York and California.

A common factor among states rated the highest was the absence of a major tax. For example, Wyoming and South Dakota have no corporate or individual income tax. Alaska has no individual income or state-level sales tax.