New state tax laws in effect
Among the tax changes underway July 1 due to a new state law are an increase in the Motor Vehicle Excise tax, nonprofits taxing services and a tax on out-of-state businesses selling $100,000 or more in goods and services to New Mexico customers.
Most of the changes were included in House Bill 6, which was sponsored by Reps. Jim Trujillo, Sheryl Williams Stapleton, Javier Martinez, Susan K. Herrera and Antonio “Moe” Maestas and signed into law by Gov. Michelle Lujan Grisham. Among the changes: • Businesses with $100,000 in sales or more in the preceding calendar year to New Mexico buyers will now be required to pay gross receipts taxes. The state calculates that collecting sales taxes from out-of-state internet sellers will raise about $43 million for the state General Fund in the coming fiscal year. “Extending gross receipts taxes to e-commerce businesses that don’t have a physical presence here eliminates an unfair competitive advantage those companies enjoyed at the expense of homegrown, New Mexico-based businesses,” said Taxation and Revenue Secretary Stephanie Schardin Clarke in a statement.
• An increase in the Motor Vehicle Excise Tax from 3% to 4%. The increase is effective for any motor vehicles purchased on July 1, 2019 or later. Revenue from this increase is estimated at $52 million annually available for roads and bridges.
• Nonprofit and governmental hospitals will now collect tax on sales and services, bringing them in line with similar for-profit hospitals. All hospitals will be eligible to deduct an additional 60% of receipts after all other eligible exemptions and deductions have been taken. This change is calculated to raise a total of $93 million per year for the General Fund.
• Smokers will pay an additional tax on cigarettes, an increase from $1.66 per pack to $2 per pack. Cigars will be taxed at 50 cents each or 25 percent of wholesale/manufacturer value, whichever is lower.
• E-cigarette liquid will now be subject to a 12.5% tax on the wholesale/manufacturer value. “Closed system” cartridges, such as Juul pods, will be taxed at 50 cents each.