Taxes in New Mexico: Features and Advantages

Main Taxes in the State of New Mexico

Income Tax:

New Mexico levies a progressive personal income tax. In 2024, rates range from 1.7% to 5.9% depending on income level. The top rate applies to individual income over $210,000 and joint income over $315,000.

Taxable income includes wages, business profits, capital gains, rental income, and passive income. The state provides standard deductions and credits, including relief for retirees, families with children, and students.

Sales Tax:

New Mexico does not have a traditional sales tax — instead it uses the Gross Receipts Tax (GRT). This applies to all types of sales, services, and even rentals, including legal, consulting, and marketing services.

The base GRT rate at the state level is 5.0%, but with municipal and county surtaxes it can reach 7.9% or higher. All businesses selling goods or providing services in the state must register and file regular reports.

Property Tax:

Property tax is levied at the county level. The average effective rate is about 0.8% of market value, relatively moderate compared to other states. In some counties and school districts, the burden may be higher; reassessments must also be considered.

Business Taxes:

Corporate Income Tax (CIT): applies to C corporations. The rate is 4.8% on profits up to $500,000 and 5.9% on amounts above that threshold.

Gross Receipts Tax (GRT): applies to all forms of business, including LLCs and sole proprietors. Even if a company is unprofitable, GRT is levied on gross receipts.

All corporations must file a Biennial Report (similar to an Annual Report) with the New Mexico Secretary of State. The deadline is biennially, by the end of the registration month. Late filing results in penalties and possible administrative dissolution.

Our company provides services for preparing and timely filing Biennial Reports.

Excise Taxes:

The state levies excise taxes on alcohol, tobacco, gasoline, marijuana, and car rentals. Some excises require separate registration and specialized reporting.

Favorable Tax Conditions in New Mexico:

Despite the presence of income and corporate taxes, New Mexico offers incentive programs for businesses, including credits for job creation, manufacturing benefits, and preferences for agriculture and creative industries.

The state remains attractive for small businesses, especially in consulting, IT, design, education, healthcare, and retail.

Taxes in New Mexico Compared to Other States:

Income tax in New Mexico is higher than in states with no income tax (e.g., Texas, Florida, Nevada), but lower than in California or New York. While there is no traditional sales tax, the GRT’s broad base can be unexpected for service-oriented businesses.

Property tax in New Mexico is below the U.S. average, benefiting owners of residential and commercial property. Business taxes are moderate, though GRT obligations remain even without profit. The absence of inheritance tax is also a plus for long-term capital planning.