New Mexico Statutes
Article 2 - Income Tax General Provisions
Section 7-2-11 - Tax credit; income allocation and apportionment.

A. Net income of any individual having income that is taxable both within and without this state shall be apportioned and allocated as follows:
(1) during the first taxable year in which an individual incurs tax liability as a resident, only income earned on or after the date the individual became a resident and, in addition, income earned in New Mexico while a nonresident of New Mexico shall be allocated to New Mexico;
(2) except as provided otherwise in Paragraph (1) of this subsection, income other than compensation or gambling winnings shall be allocated and apportioned as provided in the Uniform Division of Income for Tax Purposes Act [Chapter 7, Article 4 NMSA 1978], but if the income is not allocated or apportioned by that act, then it may be allocated or apportioned in accordance with instructions, rulings or regulations of the secretary;
(3) except as provided otherwise in Paragraph (1) of this subsection, compensation and gambling winnings of a resident taxpayer shall be allocated to this state;
(4) compensation of a nonresident taxpayer shall be allocated to this state to the extent that such compensation is for activities, labor or personal services within this state; provided that the compensation may be allocated to the taxpayer's state of residence:
(a) if the activities, labor or services are performed in this state for fifteen or fewer days during the taxpayer's taxable year;
(b) if the compensation is for activities, labor or services performed for a business in the manufacturing industry in New Mexico that is located within twenty miles of an international border, that has a minimum of five full-time employees who are New Mexico residents, that is not receiving development training funds under Section 21-19-7 NMSA 1978 and that meets the qualifications of one of Items 1) through 4) of this subparagraph: 1) the business had no payroll in New Mexico during the previous calendar year; 2) the business had a payroll in New Mexico for less than the entire previous calendar year, and the first payroll of the new calendar year includes payments to New Mexico residents exceeding the highest monthly payroll for such residents in the previous calendar year; 3) the business had a payroll in New Mexico for the entire previous calendar year, and the first payroll of the new calendar year includes payments to New Mexico residents exceeding by at least ten percent both the payroll for all employees in January 2001 and the payroll for New Mexico residents twelve months prior to the commencement of the new calendar year; or 4) the business had a payroll in New Mexico for the entire previous calendar year, but had no payroll in New Mexico within one year prior to January 1, 2001, and the first payroll of the new calendar year includes payments to New Mexico residents exceeding by at least ten percent the payroll for such residents twelve months earlier; or
(c) if the activities, labor or services are performed in this state for disaster- or emergency-related critical infrastructure work in response to a declared state disaster or emergency during a disaster response period, as defined in the Tax Administration Act [Chapter 7, Article 1 NMSA 1978];
(5) gambling winnings of a nonresident shall be allocated to this state if the gambling winnings arose from a source within this state; and
(6) other deductions and exemptions allowable in computing net income and not specifically allocated in the Uniform Division of Income for Tax Purposes Act shall be equitably allocated or apportioned in accordance with instructions, rulings or regulations of the secretary.
B. For the purposes of this section, "non-New Mexico percentage" means the percentage determined by dividing the difference between the taxpayer's net income and the sum of the amounts allocated or apportioned to New Mexico by that net income.
C. A taxpayer may claim a credit in an amount equal to the amount of tax determined to be due under Section 7-2-7 or 7-2-7.1 NMSA 1978 multiplied by the non-New Mexico percentage.
History: 1953 Comp., § 72-15A-9, enacted by Laws 1965, ch. 202, § 9; 1969, ch. 152, § 5; 1974, ch. 56, § 1; 1981, ch. 37, § 21; 1986, ch. 20, § 28; 1990, ch. 49, § 5; 1995, ch. 11, § 3; 1996, ch. 16, § 1; 2001, ch. 329, § 1; 2016, ch. 59, § 1.
Cross references. — See case notes to 7-2-3 NMSA 1978.
For Multistate Tax Compact, see 7-5-1 NMSA 1978.
The 2016 amendment, effective May 18, 2016, provided a tax exemption for certain out-of-state businesses and individuals who respond to declared disasters within New Mexico; in Subsection A, Paragraph (4), after "provided", added "that the compensation may be allocated to the taxpayer's state of residence", in Subparagraph A(4)(a), after "taxable year", deleted "the compensation may be allocated to the taxpayer's state of residence; and", in Subparagraph A(4)(b), after "Items 1) through 4) of this subparagraph", deleted "the compensation may be allocated to the taxpayer's state of residence", and after the semicolon, added "or", and added a new Subparagraph A(4)(c).
The 2001 amendment, effective June 15, 2001, designated the proviso in former Paragraph A(4) as Subparagraph A(4)(a); and added Subparagraph A(4)(b).
The 1996 amendment, effective April 1, 1996, in Subsection A, inserted "gambling winnings" in Paragraphs (2) and (3), rewrote Paragraph (5), and inserted "allocated or" and "instructions, rulings or" in Paragraph (6).
The 1995 amendment, effective June 16, 1995, substituted "Paragraph (1)" for "Paragraphs (1) and (7)" near the beginning of Paragraph A(2); added the proviso at the end of Paragraph A(4); deleted former Paragraph A(7) relating to accounting by a taxpayer having business income both within and without this state and who began business in this state after July 1, 1991, but prior to January 1, 1991; and made stylistic changes throughout the section.
The 1990 amendment, effective May 16, 1990, added "Tax credit" in the section heading; designated the introductory paragraph of the section as Subsection A and deleted "prior to the application of the tax rates provided in Section 7-2-7 NMSA 1978" following "state shall be" therein; redesignated former Subsections A to G as Paragraphs (1) to (7) of Subsection A; and, in Subsection A, substituted "Paragraphs (1) and (7) of this subsection" for "Subsections A, G and H of this section" in Paragraph (2), substituted "Paragraph (1) of this subsection" for "Subsection A of this section" in Paragraph (3), substituted "Paragraph (1)" for "Subsection (A) of this section" in Paragraph (5), substituted "secretary" for "director" in Paragraph (6), inserted "but prior to January 1, 1991" in Paragraph (7), and added Subsections B and C.
Am. Jur. 2d, A.L.R. and C.J.S. references. — 71 Am. Jur. 2d State and Local Taxation §§ 467, 472, 570, 574.
Computation of income tax as affected by fact that taxpayer was domiciled within state for only part of the taxable year, 126 A.L.R. 455.
85 C.J.S. Taxation §§ 1693 et seq.

Structure New Mexico Statutes