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Everett & Boetticher, P.C. CPA's

New Mexico Repeals Sales Tax on Food

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But tax rate increase offsets savings.

Effective January 1, 2005, New Mexico will no longer subject most food items to the gross receipts tax.  The items qualifying for tax exemption are those food items that meet federal eligibility as "food" for food stamp purposes.  Most retail stores are already set up to identify which items have historically qualified for food stamps, so the transition to also make these items exempt from gross receipts tax should go smoothly.
 
While the tax we pay on some items is eliminated, the tax we pay on everything else increases by .5% on January 1, 2005.  This increase affects all municipalities and is due to the repeal of the municipal credit.  The municipal credit has been in place for many years to help businesses within city limits compete with their counterparts in unincorporated portions of the county.  With this repeal, the City of Las Cruces tax rate will be 7% effective January 1.
 
Physicians will also see some savings on their monthly gross receipts tax reports.  As we move to 2005, doctors will not be subject to tax on payments from managed care organizations.  Included in this definition are payments from HMO's and health care insurers for commercial contract services.  Payments from private pay accounts are still subject to the tax.  The State's definition of 'doctor' has also expanded to include dentists, chiropractors, optometrists, podiatrists and other health care providers.
 
More information can be obtained by calling our office.  You can also link to the NM Taxation and Revenue Department home page at  http://www.state.nm.us/tax/home.htm and searching for FYI-201 and FYI-202 for information on the food and medical tax deductions, respectively.
 

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755 S. Telshor Blvd., Suite 201Q
Las Cruces, New Mexico 88011
(505) 522-2244
(505) 522-8049 fax