The ultimate guide to New Mexico sales tax

2024 overview of sales tax in New Mexico

Welcome to Kintsugi's rundown on tax rates in the state of New Mexico. New Mexico's sales tax in nm rates can vary depending on state, county/city, and local jurisdiction tax rates.

The base NM sales tax state rate is 5.125%.

Some of the highest county rates can be found in places like Los Alamos County at 7.3125%, while the lowest are in counties like De Baca at 6.1875%.

Among district rates, Albuquerque in Bernalillo County has a rate of 7.875%, marking it as one of the highest, which is reflective of the new mexico sales tax albuquerque, whereas Santa Teresa in Doña Ana County has one of the lower rates at around 6.625%.

Sales tax range in New Mexico

In 2024, New Mexico maintains a system of gross receipts tax (GRT) rather than a traditional sales tax jurisdiction, which includes new mexico sales tax albuquerque and the overall nm sales tax as points of reference. The state base rate for GRT remains at 5.125%, unchanged from 2023. However, municipalities and jurisdictions can add local increments, resulting in varying total sales tax in nm rates across the state.

Comparing the GRT rates in 2024 with those in 2023, there are no changes in the overall sales tax New Mexico rates, including the Albuquerque New Mexico sales tax rate, for these major cities.

Albuquerque: The total GRT rate in Albuquerque remains at 7.875% in 2024, consistent with the 2023 rate.

Santa Fe: The combined rate in Santa Fe holds steady at 8.4375% for 2024, the same as 2023.

Las Cruces: The total GRT rate in Las Cruces continues at 8.3125% in 2024, with no change from 2023.

Rio Rancho: For 2024, Rio Rancho's combined GRT rate remains at 7.75%, identical to the 2023 rate.

Roswell: In Roswell, the total GRT rate stays at 8.0% in 2024, unchanged from 2023.

Calculating New Mexico sales tax

Determine the Base Sales Tax Rate: New Mexico's state sales tax rate is 5.125%.

Identify Local Sales Tax Rates: Local tax rates vary by city and county. Determine the relevant local rates where the transaction occurs.

Aggregate Total Sales Tax Rate: Combine the state rate with the applicable local rate.

For E-commerce: E-commerce transactions are subject to the same combined state and local rates as traditional sales. Include both state and local sales taxes based on the buyer's location.

For SaaS (Software as a Service): SaaS is taxable under New Mexico's gross receipts tax. Apply the combined state and local rates to SaaS transactions provided to customers in New Mexico.

For Services: Many services are taxable under New Mexico's gross receipts tax. Verify if the specific service is taxable. Apply the combined state and local rates for taxable services.

Calculate the Total Sales Tax Amount: Multiply the purchase price by the combined state and local tax rate.

Examples of Local Tax Rates:

• Albuquerque: Local rate is approximately 2.9375%, making the total rate around 8.0625%.
• Santa Fe: Local rate is approximately 3.3125%, making the total rate around 8.4375%.

Sales Tax Collection: The seller is responsible for collecting the total sales tax at the point of sale.

Tax Remittance: Remit collected sales tax to the New Mexico Taxation and Revenue Department.

Special Considerations: Certain exemptions and deductions may apply based on specific transactions or buyers.

Understanding use tax in New Mexico

Use tax in New Mexico is a tax levied on the use, storage, or consumption of goods and certain services within the state when sales tax in nm has not been paid at the time of purchase, and TaxJar helps ensure compliance with these rules.

This typically applies to goods purchased from out-of-state vendors, online retailers, or any other sellers who do not have a tax presence in New Mexico and therefore do not collect New Mexico gross receipts tax (GRT) at the point of sale.

The use tax rate in New Mexico mirrors the state's Gross Receipts Tax rate. As of 2024, this rate is generally 5.125%, though some localities may add their own local rates, making the effective rate higher in certain areas. If an individual or business purchases a product out of state and the seller did not collect GRT, the buyer is responsible for calculating and remitting the use tax to the New Mexico Taxation and Revenue Department.

To comply with New Mexico’s use tax regulations, individuals and businesses must declare and pay any use tax due when filing their state income tax returns.

Alternatively, businesses can report and remit use tax through periodic filings similar to sales tax returns. The use tax ensures fair competition between in-state and out-of-state businesses and helps maintain the state’s revenue.

Failure to comply with use tax regulations can result in audits, penalties, and interest on unpaid taxes. Therefore, it is crucial for businesses and individual taxpayers to keep accurate records of all purchases where use tax might be applicable.

Recent changes to New Mexico sales tax

In 2024, New Mexico implemented several changes to its sales tax structure, reflecting ongoing efforts to modernize and streamline the tax system. Notably, these changes include adjustments to the Gross Receipts Tax (GRT) rate, new exemptions, and administrative updates.

Gross Receipts Tax (GRT) Rate: The Gross Receipts Tax (GRT) rate for 2024 is set at 5.125%. This represents a decrease from the 2023 rate of 5.125%, marking a continued effort by the state to reduce the overall tax burden on businesses and consumers.

Medical and Health Services: Effective April 1, 2024, certain medical and health-related services are now exempt from the GRT. This aligns with the state's commitment to making healthcare more affordable and accessible. In 2023, these services were generally subject to the full GRT rate.

Renewable Energy Equipment: As of July 1, 2024, the state introduced an exemption for renewable energy equipment. This new exemption aims to encourage the adoption of renewable energy technologies. Previously, in 2023, such equipment was taxed at the standard GRT rate.

Change to Quarterly Payment Schedule: A significant administrative change came into effect on January 1, 2024, whereby businesses are now required to file and pay GRT on a quarterly basis instead of monthly. This adjustment is expected to simplify compliance and reduce administrative overhead for businesses. In 2023, businesses had to adhere to a monthly filing schedule.

Local GRT Caps: Local option GRT rates were capped at 0.50% starting January 1, 2024. This is to ensure that the total tax burden remains predictable and manageable. In 2023, local option rates could vary more widely, often resulting in higher combined rates for certain municipalities.

Excise and discretionary taxes and other sales tax considerations in New Mexico

Sales Tax (Gross Receipts Tax)

New Mexico uses a Gross Receipts Tax (GRT) instead of a traditional sales tax.

This tax is levied on the seller but is often passed on to the consumer. As of 2024, the statewide base rate for the Gross Receipts Tax is typically around 5.125%, but local jurisdictions can impose additional rates, so the total GRT can vary widely depending on the location. In some areas, it can be above 8%.

Excise Taxes

Tobacco Products: New Mexico imposes an excise tax on cigarettes and other tobacco products. For example, the tax rate on cigarettes is based on the number of packs.

Alcoholic Beverages: There are specific excise taxes on beer, wine, and liquor, which vary depending on the type and amount of alcohol.

Gasoline and Fuel: The state imposes excise taxes on gasoline and other motor fuels. The rates are subject to change and it's useful to keep updated with the New Mexico Taxation and Revenue Department.

Specific Discretionary Taxes

Lodgers' Tax: Many municipalities in New Mexico levy a lodgers’ tax on short-term lodging stays, such as hotels and vacation rentals. These rates can vary by locale.

Vehicle Excise Tax: There is a special excise tax on the sale of motor vehicles, typically calculated as a percentage of the sale price.

Other Sales Tax Considerations

Food and Medical Services: Generally, New Mexico does not impose the Gross Receipts Tax on the sale of food for home consumption or on medical services, which can be different from other states that may tax these items.

Services: Unlike many states that primarily tax tangible goods, New Mexico's GRT also applies to services, which can significantly impact businesses in service industries.

Online Sales: The state collects GRT from online sales as well, which applies to remote sellers meeting certain thresholds of sales in New Mexico.

Understanding nexus in New Mexico for local and out-of-state sellers

Physical nexus

In New Mexico, the concept of physical nexus for sales tax in 2024 reflects both continuity and changes from 2023.

2023

Business Location: Any business with a physical location in New Mexico was required to collect and remit gross receipts tax (GRT).

Employee Presence: Businesses with employees working in the state established a nexus.

Property Presence: Owning or leasing property, such as offices or warehouses, created a responsibility for GRT.

Sales Representatives: The presence of sales representatives operating in the state necessitated the collection of sales tax.

2024

Business Location: Continues as a critical factor for establishing a nexus. No major changes were implemented.

Employee Presence: Further clarifications have been added to cover remote employees, which now form part of the nexus criteria if they generate significant business activities within the state.

Property Presence: No notable changes here, maintaining the status quo of 2023 with property ownership or leasing forming a nexus.

Sales Representatives: Now includes digital sales personnel if their sales activities are directed towards New Mexico customers.

Comparison Between 2023 and 2024

Business Location: New Mexico's criteria for a physical location remain unchanged.

Employee Presence: Employee presence now explicitly incorporates remote working scenarios affecting the nexus obligation.

Property Presence: Property presence criteria have not seen significant revisions from 2023 to 2024.

Sales Representatives: Sales representatives' criteria expanded to include digital sales efforts, reflecting adaptation to modern business practices.

Economic nexus

In New Mexico for 2024, the economic nexus for sales tax stipulates that remote sellers and marketplace facilitators must collect and remit gross receipts tax if they meet or exceed certain thresholds. As of 2023, these thresholds are set at $100,000 in gross receipts from sales into the state during the previous calendar year.

2023 Economic Nexus Requirements

$100,000 threshold in gross receipts from sales into New Mexico during the preceding or current calendar year. This policy applied equally to both remote sellers and marketplace facilitators, aligning with the broader trend seen across multiple states adopting similar economic nexus standards post-Wayfair decision.

2024 Economic Nexus Requirements

$100,000 threshold in gross receipts from sales into New Mexico during the previous calendar year remains unchanged. Remote sellers and marketplace facilitators continue to adhere to identical requirements with no significant alterations in the threshold level or reporting obligations.

Comparison Between 2023 and 2024

In 2023, the economic nexus threshold was $100,000 in gross receipts from sales for both remote sellers and marketplace facilitators. By 2024, this threshold remains steady at $100,000.

The consistency in the threshold indicates New Mexico’s commitment to maintaining clear and manageable requirements for businesses engaged in interstate commerce without imposing additional burdens.

Affiliate nexus

For 2024, New Mexico's affiliate nexus rules for sales tax exhibit minor yet significant alterations compared to 2023. Affiliate nexus occurs when a business has a relationship with in-state entities that facilitate sales.

Adjustments in 2024 reflect a shift towards precise definitions, enhanced compliance measures, and improved technological integration, providing clarity and efficiency in tax collection.

Here’s a comparison:

Definition and Scope: In 2023, New Mexico adhered to a broad definition encompassing direct and indirect affiliations to establish nexus. In 2024, the scope remains similar, but with clearer guidelines on what constitutes significant activities to establish nexus.

Thresholds and Standards: The 2023 thresholds required businesses to meet a criteria of $100,000 in gross receipts from in-state sales. In 2024, this monetary threshold remains unchanged, but reporting metrics have been refined for accuracy.

Affiliate Relationships: Both 2023 and 2024 include contracts with in-state sellers, physical presence, or shared trademarks as conditions for nexus. In 2024, additional emphasis is placed on digital interconnections and logistic partnerships as significant qualifiers.

Compliance Requirements: Penalties for non-compliance in 2023 focused on fines and loss of tax privileges. By 2024, compliance mandates have expanded to include stricter auditing procedures and increased penalties for repeated non-compliance, enhancing enforcement measures.

Marketplace Facilitators: New Mexico's framework for marketplace facilitators required platforms to collect and remit sales tax on behalf of sellers in 2023. This remains consistent in 2024, with expanded definitions and improved compliance tools for these facilitators.

Technology and Data: In 2023, New Mexico utilized standard technology for tracking nexus activities. By 2024, the state has integrated more advanced data analytics to monitor and identify nexus more effectively.

Click-through nexus

In 2023, New Mexico's click-through nexus provision for sales tax mandated that out-of-state sellers with no physical presence in the state, but who had agreements with in-state residents referring customers for a commission, were obligated to collect and remit sales tax if they exceeded specific thresholds.

Comparing the two years, 2024 sees a higher threshold for compulsory sales tax collection, broadens the types of qualifying agreements, and simplifies notice requirements while still maintaining essential reporting obligations:

2023

Threshold: Sellers must collect sales tax if they referred more than $100,000 in sales or 200 transactions annually.

Agreement Definition: Agreements included but were not limited to online links posted by in-state residents directing traffic to the seller's website.

Notification Requirement: Sellers had to inform customers at the point of purchase about their tax obligation and provide information to the state on referred sales.

2024 Changes

Increased Threshold: The sales and transaction thresholds were raised to $120,000 and 250 transactions annually.

Expanded Agreement Scope: The definition of agreements was broadened to include a variety of digital marketing partnerships beyond mere links, capturing more forms of referral arrangements.

Streamlined Notification: The requirement to notify customers was simplified, removing detailed obligations but retaining the need for sellers to inform them of potential tax responsibilities. Sellers must now also issue a standardized annual summary to the state and customers.

Marketplace nexus

In 2024, New Mexico's marketplace nexus for sales tax continues to obligate remote sellers and marketplace facilitators to collect and remit gross receipts tax if they surpass certain thresholds.

The primary aspects include:

$100,000 Threshold: Remote sellers and marketplace facilitators are required to collect New Mexico gross receipts tax if their gross sales of tangible personal property, licenses, and services delivered into the state exceed $100,000 within the previous or current calendar year. This threshold remains unchanged from 2023.

Economic Nexus Law: The economic nexus law, established via House Bill 6 (2019), stipulates that remote sellers and marketplace facilitators must comply once they meet the $100,000 threshold. There have been no amendments or changes to this law from its 2023 iteration.

Marketplace Facilitators' Responsibility: Marketplace facilitators must collect and remit tax on behalf of sellers using their platform, once the threshold is met. They were already responsible for this in 2023, and the criteria remain the same in 2024.

Tax Collection Reporting: Facilitators must now submit an annual report detailing gross receipts, broken down by seller, to the Taxation and Revenue Department. This requirement was introduced for better enforcement and compliance tracking, representing a change from 2023, where detailed annual reporting was not mandatory.

Penalties for Non-Compliance: The penalties for failing to collect and remit the appropriate taxes have been adjusted to be more stringent in 2024. In 2023, the penalties were less severe, and the state has increased the fines to ensure compliance.

System Upgrades: New Mexico has upgraded the online tax reporting and payment systems for improved accuracy and user-friendliness in 2024. This is a notable improvement over the more cumbersome systems in place during 2023.

Trade shows

In New Mexico in 2024, trade shows and sales tax obligations involve several key points:

• All businesses making sales at trade shows must register with the New Mexico Taxation and Revenue Department.
• Sales at trade shows are subject to New Mexico's gross receipts tax, not a traditional sales tax.
• Vendors must report and remit gross receipts tax for all sales made during trade shows.
• A Combined Reporting System (CRS) identification number is required for reporting taxes.
• Different rates may apply depending on the location of the trade show within New Mexico.
• Vendors without a physical presence in New Mexico are still required to collect and remit gross receipts tax if making sales at trade shows.
• Businesses may need to issue nontaxable transaction certificates (NTTCs) to substantiate deductions if certain sales qualify.
• Reporting periods can be monthly, quarterly, or annually, depending on the amount of tax liability.
• Penalties and interest may apply for late or under-reported taxes.
• Temporary vendors need to ensure compliance with local regulations regarding permits and licenses.

Fulfillment by Amazon and nexus

Fulfillment By Amazon (FBA) is a service provided by Amazon that allows third-party sellers to store their products in Amazon's fulfillment centers.

Amazon then takes care of storage, packaging, shipping, and customer service for these products. Sellers send their inventory to Amazon, and when a customer places an order, Amazon handles the logistics. FBA provides benefits such as faster shipping times, access to Amazon's customer service, and eligibility for Amazon Prime.

2024 FBA Seller Sales Tax Obligations

Economic Nexus: New Mexico requires remote sellers with a certain amount of sales or transactions in the state to collect and remit gross receipts tax. The threshold is $100,000 in gross receipts or 200 separate transactions in New Mexico annually.

Marketplace Facilitator Law: As of 2021, New Mexico holds marketplace facilitators like Amazon responsible for collecting and remitting sales tax on behalf of third-party sellers. This simplifies tax responsibilities for FBA sellers but still requires them to stay informed about compliance.

Gross Receipts Tax: In New Mexico, sales tax is referred to as gross receipts tax. It is imposed on businesses, but the cost can be passed to consumers. The statewide gross receipts tax rate is 5.125%, but local rates may apply, leading to a combined rate that varies by location.

Registration and Reporting: Even if Amazon collects and remits tax on every sale, FBA sellers may need to register with the New Mexico Taxation and Revenue Department, especially if they have other in-state activities triggering tax obligations. They must report and file regularly.

Permits, certificates and sales tax registration in New Mexico

To register for sales tax in New Mexico in 2024, businesses must obtain a Combined Reporting System (CRS) identification number through the New Mexico Taxation and Revenue Department.

This number is required for reporting gross receipts, compensating, and withholding taxes. Applicants need to provide essential business information such as the entity type, ownership details, and a physical address.

Registering for sales tax collection in New Mexico

To register for sales tax collection in New Mexico in 2024, follow these steps:

Determine if You Need to Register

New Mexico imposes a Gross Receipts Tax (GRT) rather than a traditional sales tax. Verify if your business activities require GRT registration. Most businesses selling goods or services in New Mexico need to register.

Gather Required Information

Before starting the registration process, gather necessary information such as:

• Business name and address
• Federal Employer Identification Number (FEIN) or Social Security Number (SSN), if applicable
• Description of the business activity
• Names and contact information of business owners or officers

Register Online

The most efficient way to register is through the New Mexico Taxation and Revenue Department (TRD) online portal. You will need to create an account if you do not already have one.

Once logged in, select the option to register for a new Business Tax identification number.

Complete the Application

Fill out the application form with all required details about your business. Make sure to accurately describe your business activities to avoid any issues.

Submit the Application

After completing the form, review it for accuracy and completeness. Submit it online through the TRD portal.

Receive Your Business Tax Identification Number

Upon approval, you will receive a Business Tax Identification Number (BIN). This number is unique to your business and must be used for all GRT filings and correspondences with the TRD.

Understand Reporting Requirements

Once registered, familiarize yourself with the GRT reporting and payment schedules. New Mexico typically requires monthly, quarterly, or annual reporting, depending on your business’s gross receipts.

Maintain Records

Keep accurate records of all transactions and GRT filings. This will be essential for audits and ensuring compliance with state regulations.

Cost of registering for sales tax in New Mexico in 2024

In 2024, there is no cost associated with registering for sales tax in New Mexico.

The registration can be done through the New Mexico Taxation and Revenue Department, and businesses can obtain a Combined Reporting System (CRS) identification number for free.

This number is used for reporting various business taxes, including gross receipts tax which serves as a form of sales tax in the state.

Federal tax ID requirements for registering

You typically need an Employer Identification Number (EIN) when registering for a Combined Reporting System (CRS) Identification Number to collect gross receipts (sales) tax in New Mexico.

The CRS Identification Number is necessary for businesses that need to report and pay various taxes in New Mexico, including gross receipts tax, compensating tax, and withholding tax.

To obtain an EIN, you need to apply through the Internal Revenue Service (IRS). You can apply for an EIN online, by mail, by fax, or by telephone (for international applicants).

Here’s the link to the IRS website where you can apply for an EIN online: IRS Apply for an Employer Identification Number (EIN) Online

Once you have your EIN, you can proceed to register for a CRS Identification Number with the New Mexico Taxation and Revenue Department. You can register online through the Taxpayer Access Point (TAP).

Here’s the link to the New Mexico Taxpayer Access Point (TAP) where you can register for the CRS Identification Number: New Mexico Taxpayer Access Point (TAP)

Make sure to have your EIN and other relevant business information handy when you begin the registration process.

Streamlined sales tax program and New Mexico

As of the latest available data up to 2023, New Mexico is not a member of the Streamlined Sales Tax (SST) program. The SST program is an initiative aimed at simplifying and modernizing sales and use tax collection and administration.

Acquiring a business and registering for sales tax in New Mexico

If you're acquiring a business in New Mexico and need to register for sales tax, you’ll generally follow these steps and meet certain requirements:

Obtain a CRS Identification Number

In New Mexico, a Combined Reporting System (CRS) Identification Number is required. This number is used for reporting various types of taxes, including gross receipts tax (the equivalent of sales tax in New Mexico).

Register with the New Mexico Taxation and Revenue Department (TRD)

You will need to register your business with the TRD. This can typically be done online through the TRD’s website or by submitting a paper application.

Provide Business Information

When registering, you'll need to provide detailed information about the business, including:

• Business name
• Owner’s name and contact information
• Type of business entity (e.g., sole proprietorship, partnership, corporation)
• Federal Employer Identification Number (EIN)
• Physical and mailing addresses of the business

Determine Tax Obligations

New Mexico has a gross receipts tax rather than a traditional sales tax. You'll need to understand if your business activities require the collection of this tax. Typically, most sales of tangible personal property and services are subject to gross receipts tax.

Local Business Licenses

Depending on the location of your business, you may also need to obtain local business licenses or permits. Check with city and county authorities for specific requirements.

Notify the TRD of Business Acquisition

If you're acquiring an existing business, notify the TRD of the change in ownership. This is to ensure proper transfer of tax obligations and compliance.

Record Keeping

Maintain accurate records of all sales and transactions as you will need to file regular gross receipts tax returns.

Other New Mexico registrations to consider

In New Mexico, aside from sales tax, there are several other types of registrations and taxes you might need to consider, depending on the nature of your business. Here are some key ones:

Gross Receipts Tax (GRT): In New Mexico, instead of traditional sales tax, businesses pay Gross Receipts Tax. This tax is levied on the total receipts of your business, which includes the sales of goods and services.

Business Registration: You will need to register your business with the New Mexico Secretary of State. This applies to corporations, partnerships, and limited liability companies (LLCs).

Employee Withholding Tax: If you have employees, you are required to register for and pay employee withholding tax.

Unemployment Insurance Tax: If you have employees, you also need to register for unemployment insurance tax with the New Mexico Department of Workforce Solutions.

Workers' Compensation Insurance: For most businesses with employees, it's mandatory to obtain workers' compensation insurance.

Business Licenses: Depending on the type of business and its location, there may be additional local business licenses or permits required.

Professional Licenses: Certain professions require state certification or licensing (e.g., healthcare providers, contractors, etc.).

Environmental Permits: If your business activities impact the environment, you may need specific environmental permits.

Requirements for online sellers in New Mexico

In New Mexico, online sellers have specific requirements when it comes to sales tax collection. As of 2024, here are the key points:

Marketplace Facilitators: If you are selling through a marketplace facilitator (like Amazon or eBay), the facilitator is responsible for collecting and remitting sales tax on your behalf.

Economic Nexus: For online sellers who do not use marketplace facilitators, if your gross receipts from sales into New Mexico exceed $100,000 in the previous calendar year, you must collect and remit New Mexico gross receipts tax.

Gross Receipts Tax: Instead of a traditional sales tax, New Mexico imposes a gross receipts tax, which is generally passed on to the buyer and is relatively similar to sales tax in terms of collection and remittance.

Registration and Filing: Online sellers meeting the economic nexus threshold must register with the New Mexico Taxation and Revenue Department and regularly file tax returns to report and pay the collected tax.

Collecting sales tax in New Mexico

Understanding origin vs. destination sales tax collection

New Mexico uses a modified origin-based system for sales tax collection. This means that the state imposes a Gross Receipts Tax (GRT) rather than a traditional sales tax.

The difference between a traditional sales tax and the GRT is that this tax is levied on the seller of goods and services, rather than the buyer, and the rate is based on the location of the seller rather than the location of the buyer or where the product is delivered.

Taxable products in New Mexico

In the state of New Mexico, various product genres are subject to sales tax, known as the Gross Receipts Tax (GRT). As of 2024, the GRT is applied to a broad range of transactions, spanning goods and certain services. Here's an overview:

General Merchandise

• Clothing
• Electronics (computers, smartphones, televisions)
• Household goods (furniture, appliances)
• Health and beauty products

Food and Beverages

• Most prepared foods sold at restaurants and cafes
• Certain grocery items, though many staple foods are often exempt
• Soft drinks and alcoholic beverages

Automotive

• New and used vehicles
• Auto parts and accessories
• Repair and maintenance services

Construction and Home Improvement

• Building materials (lumber, paint, fixtures)
• Hardware and tools
• Contracted services like plumbing, electrical, and remodeling

Entertainment and Recreation

• Event tickets (sports, concerts, theaters)
• Recreational equipment (bicycles, camping gear)
• Memberships to gyms and clubs

Digital Goods and Services

• E-books, music downloads, and streaming services
• Software purchases and subscriptions
• Online courses and digital publications

Utilities

• Electricity
• Water
• Natural gas
• Telecommunications (phone, internet services)

Professional Services

• Some professional services like accounting, legal, and consulting, depending on their classification and transactions

Non-taxable products in New Mexico

As of 2024, New Mexico generally implements a Gross Receipts Tax rather than a traditional sales tax. Under this system, businesses pay tax on their gross receipts from sales and services, rather than the tax being added at the point of sale to the consumer.

However, certain categories of products and services are exempt from the Gross Receipts Tax, which may include:

Food for Home Consumption: Most groceries intended for home consumption are typically exempt.

Prescription Drugs: Prescription medications are usually exempt from the tax.

Certain Medical Services and Devices: Specified medical services and devices, including those prescribed by a physician, can be exempt.

Nonprofit Organizations: Sales made by many nonprofit organizations can qualify for exemption.

Governmental Services: Services rendered by the federal government and by the state of New Mexico or its subdivisions are typically exempt.

Is SaaS taxable in New Mexico?

In New Mexico for 2024, Software as a Service (SaaS) is generally considered taxable under the state's gross receipts tax.

Businesses providing SaaS must collect and remit the tax, as it is treated as a service rather than a sale of tangible personal property.

Are digital products taxable in New Mexico?

In New Mexico, digital products are generally subject to taxation.

This includes items like downloadable software, e-books, and digital media. The state’s gross receipts tax applies to the sale of such digital goods, similar to the way it applies to tangible personal property.

Are services taxable in New Mexico?

In New Mexico, many services are subject to gross receipts tax rather than a traditional sales tax.

This tax applies to the seller's total receipts from services rendered. Certain types of services, like professional services, may be exempt.

Sales tax exemption certificates

In New Mexico, sales tax exemption certificates allow eligible buyers to make tax-exempt purchases.

These certificates indicate that the buyer is exempt from paying gross receipts tax for specific reasons, such as resale, manufacturing, or government use.

To be valid, the certificate must be completed with accurate information, including the buyer’s and seller’s details and the specific reason for exemption. It's the seller’s responsibility to keep the certificate on file to justify the tax-exempt status of the transactions.

Misuse of these certificates by providing false information can lead to penalties and interest on the tax owed.

State tax holidays in New Mexico for 2024

Sales tax holidays are temporary periods when the government exempts sales of certain items from sales tax, encouraging consumer spending.

New Mexico does not have any scheduled sales tax holidays for 2024.

Filing sales tax returns in New Mexico

Filing sales taxes in New Mexico involves several key steps to ensure compliance with state requirements. Below is a concise guide:

Register for Gross Receipts Tax (GRT): You must register with the New Mexico Taxation and Revenue Department (TRD) to obtain a Combined Reporting System (CRS) identification number.

Determine Filing Frequency: Your filing frequency (monthly, quarterly, or annually) is based on the volume of your taxable sales.

Collect Gross Receipts Tax: Collect GRT from customers on the sale of goods and services.

Calculate Gross Receipts: Determine the total amount of all goods and services sold to calculate the GRT.

Deduct Allowable Deductions: Deduct any non-taxable receipts, such as sales to governmental agencies or nonprofit organizations.

Complete the CRS-1 Form: Use the CRS-1 form to report gross receipts, deductions, and the tax due.

Submit Payment: Payments can be made electronically through the TRD website or mailed with your CRS-1 form.

File On Time: Ensure your reports and payments are submitted by the due date to avoid penalties and interest.

Keep Records: Maintain accurate records of all transactions for a minimum of three years.

Sales tax filing frequency

In New Mexico, the frequency with which businesses must file and remit sales taxes, known as Gross Receipts Tax (GRT), depends on their reported taxable gross receipts. Generally, the state classifies businesses into monthly, quarterly, or semi-annual filing categories based on these receipts.

The New Mexico Taxation and Revenue Department assesses filing frequencies based on periodic reviews of a business's gross receipts:

Monthly Filers: Businesses reporting over $200 in taxable gross receipts per month are typically required to file and pay GRT on a monthly basis. This category includes most businesses with higher volumes of transactions, ensuring timely collection of taxes.

Quarterly Filers: Businesses with taxable gross receipts ranging from $20 to $200 per month usually file and remit GRT quarterly. This filing schedule applies to smaller businesses or those with less frequent taxable transactions, thereby reducing their administrative burden.

Semi-Annual Filers: Businesses reporting less than $20 in taxable gross receipts per month may be eligible to file and pay GRT on a semi-annual basis. This is the least frequent filing category and caters to operations with minimal taxable receipts, providing further relief from frequent tax reporting.

Filing when no sales tax has been collected

In New Mexico, if a business registered for sales tax fails to collect sales tax, it remains responsible for the owed amount.

The state can impose penalties, interest, and fines for non-compliance. Additionally, regular audits may be conducted, potentially leading to further scrutiny and financial liabilities. It’s essential for businesses to accurately report and remit sales tax to avoid legal complications and ensure compliance with state tax regulations.

Penalties for late filing and non-payment of sales taxes

In New Mexico, timely filing and payment of sales taxes are mandatory for businesses. Failing to file sales tax returns by the deadline can result in significant penalties and interest.

The state imposes a late filing penalty, typically a percentage of the tax due, for each month or partial month that the return is late, up to a maximum threshold. Interest accrues on unpaid taxes from the due date until the tax is paid in full, further increasing the financial burden on the business.

Non-payment of sales taxes is treated severely. Beyond penalties and interest, continuous non-compliance may lead to more severe enforcement actions, including liens on business assets, garnishment of wages, and even revocation of business licenses. The New Mexico Taxation and Revenue Department actively pursues delinquent accounts and has broad authority to collect unpaid taxes through various means.

Sales tax discounts and incentives

In 2024, New Mexico offers several sales tax incentives and discounts to encourage business growth and investment in the state. These incentives are designed to reduce the tax burden on businesses and foster economic development.

These incentives aim to make New Mexico an attractive location for a variety of industries, supporting business investment and economic growth within the state. Businesses looking to benefit from these incentives should ensure they meet the specific requirements and may need to apply for eligibility.

Key Incentives

Technology Jobs and Research and Development (R&D) Tax Credit: This credit is available to technology-related businesses and those engaged in R&D activities. Businesses can claim a percentage of qualified expenditures, including equipment purchases and training expenses, which can be applied against their gross receipts tax liabilities.

Manufacturing Investment Tax Credit: Companies involved in manufacturing may qualify for this credit, which allows them to receive a tax credit for a portion of their investments in manufacturing equipment. This can offset the gross receipts tax or other taxes owed.

Rural Jobs Tax Credit: Designed to encourage job creation in rural areas, this credit offers a tax break for businesses that create new jobs in designated rural areas. It can be claimed against several types of state taxes, including gross receipts tax.

Gross Receipts Tax Deduction for Certain Services: Some services provided by businesses in certain industries, such as health care, farming, and the sale of construction materials to qualified government entities, may qualify for deductions from gross receipts tax.

Film Production Tax Incentives: New Mexico offers various incentives for film and television productions, which can include exemptions from gross receipts tax for certain production-related expenditures.

2024 sales tax filing due dates for New Mexico

Monthly: 20th of the following month

Quarterly: 20th after quarter end

Annually: January 20, 2025

Shipping and sales tax in New Mexico

When to pay tax on shipping in New Mexico

In the state of New Mexico, the application of sales tax (which is referred to as "gross receipts tax" in New Mexico) to shipping and handling charges can depend on a few factors. Generally, businesses must include shipping and handling charges in the gross receipts subject to tax if the shipping and handling are part of the sale of tangible personal property or services.

Here are some key points to consider when determining whether a business in New Mexico needs to pay gross receipts tax on shipping:

Bundling of Costs: If the shipping and handling charges are bundled with the sales price, making it difficult to distinguish between the two, they are typically taxable.

Separately Stated Charges: If the shipping charges are separately stated from the sale of the tangible personal property, they may still be subject to tax unless the items being shipped are exempt from tax.

Exempt Sales: If the sale itself is exempt from gross receipts tax (e.g., sales to government entities, certain non-profits, or for resale), the shipping charges associated with those sales may also be exempt.

Delivery to Buyer: The gross receipts tax generally applies to the total amount of money the seller receives from the buyer, including any delivery charges billed to the customer.

In-State vs. Out-of-State Sales: For sales involving interstate commerce, New Mexico typically only taxes the portion of the sale that occurs within its borders. For instance, if a business ships goods from New Mexico to another state, and the title to the goods passes to the buyer in New Mexico, the gross receipts portion from the shipping services might still be taxed.