The New Mexico Sales Tax Exemption: 2025 Business Guide

What is the New Mexico Sales Tax Exemption?

New Mexico’s sales tax, called the Gross Receipts Tax (GRT), includes exemptions for certain transactions to reduce tax liability. Key exemptions include sales to government entities, nonprofit organizations, goods for resale, and those with a resale certificate.

For example, if a company sells $50,000 worth of goods monthly, exempting $10,000 for resale reduces taxable gross receipts to $40,000. At a GRT rate of 7.5%, this exemption saves $750 monthly.

Exemption	Example Scenario	Savings
Resale Exemption	$10,000 exempt from $50,000 GRT	$750 saved (7.5% rate)
Nonprofit Sales	$15,000 to nonprofits excluded	$1,125 saved (7.5% rate)
Government Purchases	$20,000 in exempt sales	$1,500 saved (7.5% rate)

Overview of the State of New Mexico Taxation System

New Mexico’s taxation system relies on the Gross Receipts Tax (GRT), applied to most goods and services instead of a traditional sales tax. GRT rates vary by location, typically between 5% and over 9%. Businesses are taxed on total receipts, but exemptions and deductions reduce this liability, such as goods for resale, nonprofit sales, and government purchases.

For example, a business in Santa Fe earning $120,000 monthly with $40,000 exempt pays 7.5% on $80,000, resulting in $6,000 GRT instead of $9,000.

Category	Amount	Details
Total Monthly Revenue	$120,000	Total gross receipts for the business.
Exempt Revenue	$40,000	Sales for resale and nonprofits.
Taxable Revenue	$80,000	Revenue after exemptions are applied.
GRT Rate	7.5%	Average rate for Santa Fe.
GRT Due	$6,000	Tax calculated on $80,000 taxable base.

A More Complex Scenario: Sales Tax Exemptions for Businesses in New Mexico

Sales tax exemptions in New Mexico can involve multiple categories, significantly reducing tax liabilities. Consider a manufacturing business with $150,000 monthly gross receipts.

Exemptions include $50,000 for goods resold by distributors, $30,000 for machinery (manufacturing exemption), and $20,000 for nonprofit sales. These reduce taxable receipts to $50,000. At a 7.5% Gross Receipts Tax (GRT) rate, the company saves $7,500 monthly.

Exemption Type	Gross Amount	Exempt Revenue	Taxable Revenue	Tax Savings (7.5%)
Resale Exemption	$50,000	$50,000	$100,000	$3,750
Manufacturing Equipment	$30,000	$30,000	$70,000	$2,250
Nonprofit Sales	$20,000	$20,000	$50,000	$1,500

Note: If this business failed to leverage exemptions, it would owe $11,250 on $150,000 gross receipts. Applying these exemptions lowers their taxable base, resulting in $3,750 total tax, saving 67% on their tax bill.

Qualifying for a Sales Tax Exemption in New Mexico

Qualifying for a sales tax exemption in New Mexico can save businesses thousands by reducing taxable gross receipts through specific deductions and exemptions. This section will discuss how to qualify for a sales tax exemption under New Mexico law and which business types are eligible to apply.

How to Qualify for Sales Tax Exemption in New Mexico

To qualify for a sales tax exemption in New Mexico, businesses must meet specific criteria based on transaction type. Common exemptions include sales for resale, manufacturing equipment, and nonprofit purchases. Businesses must provide an NTTC (Nontaxable Transaction Certificate) to claim exemptions.

For example, a retailer purchasing $50,000 in inventory for resale can present an NTTC to avoid the 7.5% Gross Receipts Tax, saving $3,750, provided they meet the economic nexus criteria.

Exemption Type	Requirement	Example Savings (7.5%)
Resale	NTTC Required	$3,750 on $50,000
Manufacturing Equipment	NTTC + Qualifying Use	$2,250 on $30,000

Documentation Required for Tax and Revenue New Mexico Applications

To obtain a sales tax exemption in New Mexico, businesses must provide specific documentation based on the exemption type. The Nontaxable Transaction Certificate (NTTC) is the primary document required for most exemptions, ensuring compliance and tax savings for businesses in New Mexico.

Exemption Type	Required Documentation	Example Savings (7.5%)
Resale	NTTC issued to the seller	$3,750 on $50,000 sales
Manufacturing Equipment	NTTC + Proof of qualifying use	$2,250 on $30,000
Nonprofit Organizations	NTTC + IRS 501(c)(3) determination	$1,500 on $20,000
Government Purchases	Purchase order + NTTC	$2,250 on $30,000

Steps to Verify Tax-Exempt Status Through Tax and Rev New Mexico

Businesses in New Mexico must verify tax-exempt status by obtaining and managing Nontaxable Transaction Certificates (NTTCs) through the Taxpayer Access Point (TAP) system. This ensures compliance with New Mexico Taxation and Revenue Department (NMTRD) regulations.

Verification Process

Step	Action Required	Reference
Register for NM Tax ID	Obtain a New Mexico Business Tax Identification Number (NMBTIN).	Register Here
Apply for NTTCs	Request the correct NTTC type based on business activities.	NTTC Guide
Execute NTTCs	Provide NTTCs to vendors for tax-exempt transactions.	TAP System
Maintain Records	Keep NTTCs on file for audits and compliance.	FYI-204 NTTC

FAQs

What are the types of businesses eligible for business tax exemptions in New Mexico?

Certain businesses in New Mexico qualify for tax exemptions, including resellers, manufacturers, nonprofits, and government entities, reducing taxable gross receipts.

Are Schools Exempt from Sales Tax in New Mexico?

Yes, schools in New Mexico are generally exempt from sales tax on purchases if they provide a valid NTTC.

What are some New Mexico tax incentives for businesses?

New Mexico offers tax incentives like the High Wage Jobs Tax Credit, Manufacturing Equipment Deduction, Film Production Tax Credit, and Renewable Energy Incentives to reduce business tax liabilities.

What Is Exempt from Gross Receipts Tax in New Mexico?

New Mexico exempts resale goods, nonprofit sales, government transactions, and manufacturing equipment from Gross Receipts Tax, saving sellers up to $7,500 per $100,000 in qualifying transactions.

Common Goods and Services That Are Tax-Exempt in New Mexico

Category	Examples	Details
Goods for Resale	Retail inventory, wholesale products	Must provide a valid NTTC for exemption.
Manufacturing Equipment	Machinery, tools, and parts for production	Applies if used directly in manufacturing.
Nonprofit Sales	Charitable donations, sales to 501(c)(3) groups	Requires NTTC Type 9.
Government Transactions	Sales to federal, state, and local agencies	Requires NTTC Type 6.
Medical Equipment	Prescription devices, durable medical goods	Must meet medical exemption criteria.
Food Stamps/WIC	Qualifying food items purchased under assistance programs	Automatically exempt.

Automating New Mexico Sales Tax Exemptions for Your Business

Managing New Mexico sales tax compliance can be complex, from verifying local tax rates to tracking exemptions and meeting filing deadlines. Kintsugi simplifies this process with powerful automation tools designed for modern businesses.

Streamlining Compliance With Tax and Rev New Mexico

Kintsugi simplifies Gross Receipts Tax (GRT) compliance by automating tax calculations, resale certificate and exemption management, and reporting, helping businesses reduce errors and save time.

Compliance Challenge	How Kintsugi Helps	Benefits
Correct GRT Calculation	Automates tax rate determination across New Mexico's 5–9%+ GRT variations.	Prevents underpayment or overpayment.
Exemption Management	Stores and validates NTTCs for resale, nonprofit, and government exemptions.	Ensures proper tax exemption usage.
Filing & Reporting	Generates accurate GRT reports for timely state filings.	Reduces administrative burden.
Audit Readiness	Centralizes exemption certificates and transaction records.	Minimizes audit risk and penalties.

Leveraging Technology to Simplify Gross Receipts Tax in New Mexico

Let Kintsugi handle the complexities of New Mexico sales tax so you can focus on growing your business. Visit our Product Platform and Pricing pages to learn more and get started today!