New Mexico
Taxes and business formation • USA 2025–2026
LLC in New Mexico
Corporation in New Mexico
Tax system of New Mexico
Income Tax
New Mexico has 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 above $210,000 and to joint spousal income above $315,000. Wages, business income, capital gains, rental income, and passive income are all taxable. The state provides standard deductions and tax credits, including benefits 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). It 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 surcharges it can reach 7.9% or more. All businesses selling goods or providing services in the state are required to register and file regular returns.
Property Tax
Property tax is levied at the county level. The average effective rate is about 0.8% of market value, which is relatively moderate compared with other states. However, in some counties and school districts the tax burden can be higher, and property reassessments should also be taken into account.
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 exceeding that threshold. Gross Receipts Tax (GRT): applies to all forms of business, including LLCs and sole proprietors. Even if a company is operating at a loss, the GRT is charged on gross revenue. All corporations are required to file a Biennial Report (the equivalent of the Annual Report) with the New Mexico Secretary of State. It is due every two years, by the end of the month of registration. Late filing results in penalties and administrative closure of the business. If you have difficulty filing the Biennial Report, our firm provides services for preparing and filing this report on time.
Excise Taxes
The state levies excise taxes on alcohol, tobacco, gasoline, marijuana, and car rentals. Some excise taxes require separate registration and specialized reporting.
Favorable Tax Conditions
Despite the presence of personal and corporate income taxes, New Mexico offers tax incentive and support programs for business, including credits for job creation, benefits for manufacturers, and preferences for the agricultural and creative sectors. The state remains attractive for small business, especially in consulting, IT, design, education, healthcare, and retail.
Compared to Other States
Personal income tax in New Mexico is higher than in states with no income tax (for example, Texas, Florida, or Nevada), but lower than in California or New York. Although there is no traditional sales tax, the GRT has a broad base that can come as an unexpected burden for businesses, especially in the service sector. Property tax in New Mexico is below the U.S. average, which is favorable for residential and commercial real estate owners. Business taxes are moderate, but GRT obligations remain even when there is no profit. The absence of an estate tax is also a plus for long-term capital planning.
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