Tax Exemptions on Labor and Retirement Income
In New Mexico, installation labor is not taxable. This includes materials, labor, and installation costs. Retirement income from pensions or retirement accounts is taxable in New Mexico, though there is an $8,000 deduction. To become tax-exempt in New Mexico:
- File federal form 1023.
- Apply to New Mexico tax authorities.
New Mexico has a gross receipts tax instead of sales tax. The state-wide rate is 5.125%, and counties can add up to 4.125%.
Social Security and Tax Rates
Manufacturing in Mexico can cut production and labor costs. The institution for social security in Mexico is the Mexican Social Security Institute (IMSS), which provides medical services and social security to Mexican employees. Every private sector employee has social security rights. Contribution calculations involve the Base de Cotización Integrada (BLS), with the 2023 BLS limit being ₱ 0.00.
Mexican personal income tax does not apply to active duty military salaries. New Mexico personal income tax rates range from 1.7% to 4.9%. Unemployment appeals can now be filed electronically in New Mexico.
VAT for Non-Resident Employees
Non-resident employees working temporarily in Mexico are not obligated to pay VAT. The person contracted is obligated to pay the VAT.