Premium Cigar Taxes by State, 2024
Over 500 million premium cigars were sold in the United States in 2023. With each sale comes a complex tax landscape.
4 min readNew Mexico‘s tax system ranks 31st overall on the 2025 State Tax Competitiveness Index. New Mexico has a graduated state individual income tax with a top rate of 5.9 percent. Unusually, New Mexico’s corporate tax rate is also graduated, with rates ranging from 4.8 percent to 5.9 percent, and not indexed for inflation.
New Mexico also has a 4.875 percent tax on sales, with an average combined state and local rate of 7.62 percent. As a hybrid between an ordinary sales tax and a gross receipts tax, this tax does not apply to all intermediate transactions like a pure gross receipts tax but does apply to many more business inputs than are included in a typical sales tax, including manufacturing machinery and research and development (R&D) equipment. When this gross receipts-like tax applies to business-to-business transactions, it causes tax pyramiding throughout the supply chain, hampers investment, and negatively affects low-margin businesses.
The state’s corporate income tax also features a throwback rule, which exposes in-state businesses to additional tax when they sell into other states with which they do not have nexus, discouraging some businesses from locating operations in New Mexico. The state conforms to the federal treatment of capital investment under its corporate income tax, but with federal full expensing provisions currently phasing out, New Mexico has an opportunity to make its first-year expensing provisions permanent to avoid the erosion of this pro-investment provision.
Category | Rank | Rank Change | Score |
---|---|---|---|
Overall | 31 | 1 | 5.02 |
Corporate Taxes | 22 | 4 | 5.35 |
Individual Income Taxes | 37 | 0 | 4.73 |
Sales Taxes | 41 | -1 | 4.01 |
Property Taxes | 2 | 0 | 6.45 |
Unemployment Insurance Taxes | 16 | 2 | 5.40 |
Over 500 million premium cigars were sold in the United States in 2023. With each sale comes a complex tax landscape.
4 min readPolicymakers can and should address taxpayers’ legitimate grievances about out-of-control property tax bills, but they should do so without upending a system of taxation that is more efficient, fair, and pro-growth, and better suited to municipal finance, than any of the alternatives.
39 min readThe State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
115 min read