WASHINGTON, D.C. ― As 2017 gets underway, four states–including New Mexico–and the District of Columbia will phase in cuts to their respective corporate income tax rates. New Mexico’s rate will go from 6.6 percent to 6.2 percent.
In 2018, the rate will settle at 5.9 percent, down from 7.6 percent in 2013. The rate cuts were paired with a broadening of the tax base by reducing the generosity of some corporate tax credits.
“Since 2008, 15 states in total have reduced their corporate income tax rates,” said Scott Drenkard, director of state projects for the Tax Foundation. “These reductions appear to be a growing trend in state tax policy, as corporate taxes make up a small amount of total tax collections, but have an outsized impact on business location and expansion decisions.”
Drenkard added, “Corporate tax reductions end up being good news for all taxpayers, as individuals end up paying corporate taxes in the form of higher prices, lower wages, or reduced dividend payouts.”
New Mexico currently ranks 35th overall on the index. But as the corporate tax rate reductions continue, these reforms will enhance the state’s standing in comparison to its neighbors and further improve its corporate tax component score.