Groceries are taxable if you pay for delivery in New Mexico

In this time when more New Mexicans than ever are getting a vast majority of their food at grocery stores (as opposed to restaurants), we uncovered a bit of a quirk in New Mexico’s tax code that is not even clarified in many documents put out by the Tax and Revenue Department.

As most New Mexicans are aware, groceries are generally not taxed. If you go to the grocery store and pick up your groceries curbside, that service is not taxed.

However, if the store is charging a fee for service delivery from a New Mexico grocery store to your home in New Mexico, the entire grocery order is now taxable at the full tax rate.

So, if you pick up $500 worth of groceries (not an unheard of sum given the challenges these days) from your local Wal Mart you pay no tax, but if you get the same groceries delivered in Albuquerque you pay nearly $40 in taxes.

Setting aside whether Bill Richardson’s decision to exempt groceries from GRT and raise the rate to pay for it was a good decision, this kind of complexity is definitely not good tax policy. Of course, the GRT itself is bad tax policy.

UPDATE: Thanks to our friends at Think New Mexico who uncovered this information about NM’s grocery tax guidelines following federal SNAP regulations. There is a pilot program under which states can exempt grocery delivery from taxation, but NM is not part of it yet.

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