A resident of New Mexico who must pay tax to another state on income that is also taxable in New Mexico may take a credit against New Mexico tax for tax paid to the other state.
This credit is for tax that another state imposes on any portion of income that by law is included in New Mexico net income. Tax withheld is not a factor in calculating the allowable credit. If the specific item of income is not subject to taxation in both states, no credit is available. The credit may not be more than the New Mexico tax liability, the sum of lines 15 and 16, on Form PIT-1, or more than 5-1/2% of the income taxable in the other state. Also, the amount of the credit may not exceed the amount of tax paid to the other state. Attach a copy of the complete income tax return(s) from the other state(s).