New Mexico has no sales tax. It has a gross receipts tax, and that difference shapes how businesses price, invoice and file in the state. This page covers the state and local taxes you are most likely to meet if you live, work, own property or run a business here, including owners elsewhere who sell into the state. It is general information for tax year 2025 returns and 2026 planning.
Gross receipts tax is not a sales tax
The Taxation and Revenue Department (TRD) imposes GRT on businesses for the privilege of doing business in New Mexico. The base reaches beyond retail: sales and leases of property used here, franchises and services performed here are all included. A business may pass the tax on only if it is separately stated on the invoice, and business expenses are not deductible.
The state portion is currently 4.875%. Counties and municipalities may add local option increments, so the combined rate depends on the sale's location code: usually the delivery location for goods, the construction site for construction work, and the performer's location for most professional services. Since July 1, 2025, rates change only in July unless an emergency such as a natural disaster intervenes.
A business with no physical presence, including a marketplace provider, owes GRT once it has at least $100,000 of taxable gross receipts sourced to New Mexico in the previous calendar year. See our guide to sales tax nexus and our sales and use tax service.
Returns (Form TRD-41413) are due by the 25th of the month after the period. TRD assigns monthly, quarterly or semiannual filing, and some taxpayers must e-file through the Taxpayer Access Point. Some Department pages still call the return the CRS-1.
Income tax, Social Security and capital gains
New Mexico starts from federal AGI and applies a graduated table, and your filing status must match your federal return. For 2025 the top rate is 5.9% on taxable income above $210,000 (single), $315,000 (joint or head of household) or $157,500 (married filing separately); TRD's rate table shows the lower brackets. Adjustments on Schedule PIT-ADJ for 2025 include:
- Social Security: exempt only if federal AGI is within the limit for your status: $100,000 single, $150,000 joint, head of household or surviving spouse, $75,000 married filing separately. Above it, none qualifies; compare the federal rules.
- Capital gains: the greater of 100% of net capital gains up to $2,500, or 40% of up to $1,000,000 of gain from selling a business allocated to New Mexico.
- Age 65 and older: an exemption of up to $8,000 each, depending on income. Active-duty military pay is also exempt.
Residents are those present 185 days or more. Nonresidents with New Mexico-source income file the PIT-1 with Schedule PIT-B, and the credit for tax paid to another state is for residents only. TRD has stepped up identity-theft reviews, so some refunds wait on documents.
Entities: franchise tax and the entity-level election
Corporations, including S corporations, owe a $50 annual franchise tax reported on Form CIT-1. Pass-through entities file by the federal due date and withhold on nonresident owners unless the entity elects to pay the tax itself.
The election is annual, binds every owner and cannot be changed by amending. TRD says the entity-level tax uses the higher of the personal or corporate rate, currently 5.9%, with owners claiming a credit, and cautions entities with net operating losses. Whether it helps depends on SALT-cap planning and owners' other states; see our multi-state tax service. Business filings go through the Secretary of State.
Payroll and the workers' compensation fee
Employers who withhold federal tax must register with TRD and withhold New Mexico tax (Form TRD-41414), with information returns generally due by the last day of February. Exceptions cover certain nonresidents, active-duty military pay and enrolled tribal members working on tribal lands.
Employers and covered employees also pay a workers' compensation fee that TRD collects on Form TRD-41431 with the quarterly wage report. It is not insurance; you still need a policy. Unemployment insurance is filed separately with the Department of Workforce Solutions, which sets your rate and wage base. The state also enacted the Healthy Workplaces Act, a paid sick leave law, in 2021, so confirm current accrual rules. See payroll services and local payroll taxes.
Local taxes and property
Local option GRT increments are adopted by ordinance, sometimes after a vote, and collected by the state. County assessors value property, and TRD's Property Tax Division oversees them. Oil and gas producers pay separate ad valorem production and equipment taxes. TRD has district offices in Albuquerque, Santa Fe, Farmington, Las Cruces and Roswell.
How we can help New Mexico clients
We prepare PIT-1 and PIT-B returns, register sellers for GRT and assign location codes, compare the entity-level election with owner withholding, and review TRD letters. For H-1B and NRI families moving to Albuquerque or Santa Fe, we align residency with federal status (H-1B and visa holders). Illinois owners can tie New Mexico activity to their Illinois return.
Frequently asked questions
Is New Mexico gross receipts tax the same as sales tax?
No. GRT is imposed on the business, not the buyer, and may be passed on only if separately stated on the invoice.
Is Social Security taxed in New Mexico?
Not if your 2025 federal AGI is within the limit for your status: $100,000 single, $150,000 joint, head of household or surviving spouse, $75,000 married filing separately.
Do I owe New Mexico GRT if I sell from another state?
Possibly. Without a physical presence, the trigger is $100,000 of New Mexico taxable gross receipts in the previous calendar year.
Should my S corporation elect entity-level tax in New Mexico?
It depends on your owners, their other states and federal limits on state tax deductions. The election binds all owners, so model it first.
What if I get a letter from the Taxation and Revenue Department?
Note the tax type and deadline, gather records and reply on time. We can review it with you first.
Official sources
- NM Taxation and Revenue: 2025 tax rate table
- NM Taxation and Revenue: Personal income tax overview
- NM Taxation and Revenue: 2025 PIT-ADJ instructions
- NM Taxation and Revenue: Gross receipts tax return instructions
- NM Taxation and Revenue: Pass-through entities
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.