New Mexico Statutes
Article 2 - Income Tax General Provisions
Section 7-2-3 - Imposition and levy of tax.

A tax is imposed at the rates specified in the Income Tax Act upon the net income of every resident individual and upon the net income of every nonresident individual employed or engaged in the transaction of business in, into or from this state, or deriving any income from any property or employment within this state.
History: 1953 Comp., § 72-15A-3, enacted by Laws 1965, ch. 202, § 3; 1979, ch. 92, § 2; 1981, ch. 37, § 14.
Cross references. — See case notes to 7-2-2 NMSA 1978.
For income tax rates, see 7-2-7 and 7-2-7.1 NMSA 1978.
Temporary provisions. — Laws 2020 (1st S.S.), ch. 4, § 4, effective June 29, 2020, provided:
A. Notwithstanding Sections 7-1-67 and 7-1-69 NMSA 1978, no interest shall accrue and no penalty shall be assessed to a taxpayer for:
(1) tax liabilities pursuant to the Income Tax Act or the Corporate Income and Franchise Tax Act for failure to pay the tax that became due April 15, 2020 through July 15, 2020; provided that the failure to pay the tax was made without intent to evade or defeat the tax; and provided further that payment for the unpaid payments is made in full on or before April 15, 2021;
(2) tax liabilities pursuant to the Withholding Tax Act for failure to pay the tax that became due March 25, 2020 through July 25, 2020; provided that the failure to pay the tax was made without intent to evade or defeat the tax; and provided further that payment for the unpaid taxes is made in full on or before April 25, 2021;
(3) gross receipts tax, local option gross receipts tax or compensating tax liabilities for failure to pay any of those taxes that became due March 25, 2020 through July 25, 2020; provided that the failure to pay the tax was made without intent to evade or defeat the tax; and provided further that payment for the unpaid taxes is made in full on or before April 25, 2021; and
(4) tax liabilities assessed between September 3, 2019 and January 3, 2020 as the result of a managed audit performed in accordance with a managed audit agreement pursuant to Section 7-1-11.1 NMSA 1978; provided that payment for those liabilities is made pursuant to terms of the managed audit agreement on or before December 31, 2020.
B. Notwithstanding Sections 7-38-49 and 7-38-50 NMSA 1978, no interest shall accrue and no penalty shall be assessed to a property owner for unpaid property taxes that became due April 10, 2020 pursuant to Section 7-38-38 NMSA 1978; provided that:
(1) the unpaid property taxes did not become delinquent because of an intent to defraud by the property owner;
(2) payment for the unpaid property taxes is made in full on or before May 10, 2021; and
(3) the subject property does not have property taxes that became delinquent pursuant to Section 7-38-46 NMSA 1978 prior to May 10, 2020.
Constitutionality of tax on nonresidents. — The opportunity to exercise "intelligence, skill and labor while employed in the State of New Mexico" is a sufficient benefit to support imposition of state income tax on nonresident employees of a federal enclave. Lung v. O'Chesky, 1980-NMSC-104, 94 N.M. 802, 617 P.2d 1317.
Retirement income. — An income tax exemption granted to retirees of New Mexico state educational institutions, but not extended to retirees of California state educational institutions, does not discriminate against the federal government in violation of the doctrine of intergovernmental tax immunity (ITI) when the federal government funds the retirement accounts of the California state educational institution retirees. The same exemption does not discriminate against the sovereign State of California in violation of the ITI doctrine. Alarid v. Sec'y of Dep't of Taxation & Revenue, 1994-NMCA-075, 118 N.M. 23, 878 P.2d 341, cert. denied, 118 N.M. 90, 879 P.2d 91, cert. denied, 513 U.S. 1081, 115 S.Ct. 733, 130 L.Ed.2d 636 (1994).
Tax burden should fall with uniformity and equality upon the class of persons sought to be taxed. N.M. Elec. Serv. Co. v. Jones, 1969-NMCA-111, 80 N.M. 791, 461 P.2d 924.
"Income". — Taxpayers' wages and salaries from employment constituted "income" for purposes of determining their tax liability. Holt v. N.M. Dep't of Taxation & Revenue, 2002-NMSC-034, 133 N.M. 11, 59 P.3d 491.
State taxes domiciliaries' net income and nondomiciliaries' property income. — New Mexico taxes the net income of all New Mexicans and all nondomiciliaries deriving income from property in New Mexico. Murphy v. Taxation & Revenue Dep't, 1980-NMSC-012, 94 N.M. 54, 607 P.2d 592.
Income of Indians from activities on reservation exempt. — New Mexico may not tax income and gross receipts of Indians residing on a reservation when the income and gross receipts involved are derived solely from activities within the reservation. Hunt v. O'Cheskey, 1973-NMCA-026, 85 N.M. 381, 512 P.2d 954, cert. quashed, 85 N.M. 388, 512 P.2d 961.
Indian on other tribe's reservation may be taxed. — Income earned by Native Americans while living and working on reservations of which they are not tribunal members is taxable by the state. N.M. Taxation & Revenue Dep't v. Greaves, 1993-NMCA-133, 116 N.M. 508, 864 P.2d 324.
State tax statutes may constitutionally refer to federal definitions. — A state has the power to gauge its income tax by reference to the income on which the taxpayer is required to pay a tax to the United States, and the constitutionality of state statutes which refer to the Internal Revenue Code definitions have been upheld. Champion Int'l Corp. v. Bureau of Revenue, 1975-NMCA-106, 88 N.M. 411, 540 P.2d 1300, cert. denied, 89 N.M. 5, 546 P.2d 70.
Election to treat unrealized gain as federal income makes it state income. — When multistate corporate taxpayer elected to treat the cutting of certain timber as a sale or exchange, eligible for taxation at capital gains rates, even though the timber had not actually been sold, it was held that since its federal income tax was calculated by use of this gain, the gain was includable in its base income for New Mexico income tax purposes. Champion Int'l Corp. v. Bureau of Revenue, 1975-NMCA-106, 88 N.M. 411, 540 P.2d 1300, cert. denied, 89 N.M. 5, 546 P.2d 70.
Gain may be included in apportionable income of multistate corporation. — New Mexico was not taxing on out-of-state activity where it included gain from the cutting of timber treated by the taxpayer as a sale or exchange for federal tax purposes in the apportionable business income of the corporation. Champion Int'l Corp. v. Bureau of Revenue, 1975-NMCA-106, 88 N.M. 411, 540 P.2d 1300, cert. denied, 89 N.M. 5, 546 P.2d 70.
Law reviews. — For note, New Mexico Taxes Non-Member Indians Who Work on a Reservation: New Mexico Taxation and Revenue Dep't v. Greaves, see 25 N.M.L. Rev. 129 (1995).
Am. Jur. 2d, A.L.R. and C.J.S. references. — 71 Am. Jur. 2d State and Local Taxation §§ 470 to 474, 512 to 517.
85 C.J.S. Taxation § 1715 to 1719.

Structure New Mexico Statutes