New Mexico LLC Business Taxes: What You Need to Pay
Find out what taxes your New Mexico LLC needs to pay — including gross receipts tax, state income tax, franchise tax, and federal pass-through taxes. Clear answers for LLC owners.
Bizee Editorial Staff
Editorial Team
New Mexico LLC tax facts at a glance
Filing fee: $50
Processing time: 1–3 weeks (standard)
State agency: New Mexico Secretary of State
Annual report due: No annual report required
State tax rate: Gross receipts tax: 5.125% base rate (local rates vary); Personal income tax: 1.7%–5.9% (graduated); Franchise tax: $50 minimum (C corps and LLCs taxed as corporations)
New Mexico LLC tax overview
A New Mexico LLC typically owes gross receipts tax on business revenue, state income tax passed through to the owner's personal return, a $50 franchise tax if taxed as a corporation, and federal self-employment and income taxes. The exact mix depends on how your LLC is classified for tax purposes.
- Gross receipts tax (GRT): New Mexico's version of a sales tax, charged on most business revenue
- State income tax: passed through to owners and reported on personal returns
- Franchise tax: $50 minimum, applies to LLCs taxed as C corporations
- Federal self-employment tax: 15.3% on net self-employment income
- Federal income tax: reported on your personal return for single-member LLCs, or via Form 1065 for multi-member LLCs
State taxes: gross receipts and income tax
New Mexico has 2 main state-level taxes that affect most LLCs: the gross receipts tax and the state personal income tax. New Mexico doesn't have a traditional sales tax — instead, it charges a gross receipts tax (GRT) on the seller, not the buyer.
Gross receipts tax (GRT)
The GRT applies to most businesses selling goods or services in New Mexico. The base state rate is 5.125%, but local municipalities add their own rates on top — so the combined rate varies by location. Most businesses pass the GRT cost along to customers, but legally the tax is owed by the business, not the buyer. That distinction catches some new LLC owners off guard.
State income tax
New Mexico uses graduated personal income tax rates ranging from 1.7% to 5.9%. For most LLCs — single-member or multi-member — income passes through to the owner's personal state return. You don't pay a separate business income tax at the LLC level unless your LLC has elected to be taxed as a C corporation.
Franchise tax
New Mexico does have a franchise tax, but it doesn't apply to every LLC. The $50 minimum franchise tax applies to LLCs that have elected to be taxed as a C corporation and file Form CIT-1 with the New Mexico Taxation and Revenue Department. Standard pass-through LLCs — single-member or multi-member — are not subject to the franchise tax.
If your LLC has elected C corporation status by filing IRS Form 8832, you'll file Form CIT-1 at the state level and owe at least $50 in franchise tax, regardless of whether the business turned a profit.
Federal taxes for New Mexico LLCs
Federal taxes for a New Mexico LLC depend on how the IRS classifies your business. By default, a single-member LLC is a disregarded entity — you report income on Schedule C of your personal Form 1040. A multi-member LLC is treated as a partnership by default and files Form 1065, with each member receiving a Schedule K-1 showing their share of income.
On top of income tax, LLC owners who are active in the business owe self-employment tax — 15.3% on net self-employment income up to the Social Security wage base, then 2.9% above that. You can deduct half of the self-employment tax on your federal return. Most LLC owners also need to make quarterly estimated tax payments to avoid an underpayment penalty at year end.
S corporation election
If your LLC elects S corporation status by filing IRS Form 2553, you'll pay yourself a reasonable salary as a W-2 employee and take additional profit as distributions. Only the salary portion is subject to self-employment tax — which is why some LLC owners pursue this election once the business is generating consistent income. A tax professional can help you figure out whether the S corp election makes sense for your situation.
Payroll and employer taxes
If your New Mexico LLC has employees, you'll need to withhold and remit payroll taxes at both the federal and state levels. Federal payroll taxes include Social Security, Medicare (FICA), and federal income tax withholding. At the state level, New Mexico requires employers to withhold state income tax from employee wages and remit it to the New Mexico Taxation and Revenue Department.
You'll also need to register for a New Mexico employer withholding account before your first payroll. Getting payroll set up correctly from the start is worth the effort — getting it wrong can mean back taxes, penalties, and interest owed to both the IRS and the state.
FAQ
Not exactly. New Mexico doesn't have a traditional sales tax. Instead, it charges a gross receipts tax (GRT) on businesses for the privilege of doing business in the state. The base state GRT rate is 5.125%, and local municipalities add their own rates on top. Most businesses pass the cost along to customers, but the legal obligation sits with the business.
Yes. New Mexico has a graduated personal income tax with rates ranging from 1.7% to 5.9%. For most LLCs, income passes through to the owner's personal state return — there's no separate LLC-level income tax unless the business has elected C corporation status.
Yes, but it only applies to LLCs taxed as C corporations. The minimum franchise tax is $50, filed with Form CIT-1. Standard pass-through LLCs — whether single-member or multi-member — don't owe the franchise tax. If you haven't elected C corporation status, this one doesn't apply to you.
Yes. Most LLC owners need to make quarterly estimated tax payments to both the IRS and the New Mexico Taxation and Revenue Department. If you expect to owe $1,000 or more in federal taxes for the year, the IRS requires quarterly payments. New Mexico has a similar threshold at the state level. Missing estimated payments can mean an underpayment penalty when you file.
It depends on how your LLC is taxed. For pass-through LLCs, income is taxed at the owner's personal rate — New Mexico's graduated rates run from 1.7% to 5.9%. LLCs taxed as C corporations pay the New Mexico corporate income tax rate plus a $50 minimum franchise tax. On top of state taxes, federal self-employment tax is 15.3% on net self-employment income.
It depends on your LLC's tax classification. A single-member LLC reports income on Schedule C of the owner's federal Form 1040. A multi-member LLC files federal Form 1065 and issues Schedule K-1s to each member. LLCs taxed as S corporations file IRS Form 1120-S. LLCs taxed as C corporations file Form CIT-1 with New Mexico and IRS Form 1120 at the federal level.
No. New Mexico does not require LLCs to file an annual report with the Secretary of State. That's one of the reasons New Mexico is a popular state for LLC formation. You still need to meet your tax filing obligations with the New Mexico Taxation and Revenue Department, but there's no annual report fee or filing deadline to track.
