New Mexico Business Taxes: Agencies, Accounts & Filing Guide

New Mexico Tax Agencies and Required Accounts

Operating a business in New Mexico requires coordinating across three state agencies and the Internal Revenue Service (IRS). The form of business you operate determines which returns you file and which identification numbers you need before collecting revenue or hiring staff.

Any business entity other than a sole proprietor with no employees must first obtain a Federal Employer Identification Number (FEIN) from the IRS. At the state level, the New Mexico Secretary of State (SOS) handles entity formation, while the New Mexico Taxation and Revenue Department (TRD) administers over 30 tax programs. Employers also register with the New Mexico Department of Workforce Solutions (NMDWS) for state unemployment taxes.

Every person or company engaging in business in New Mexico must register with TRD to receive a New Mexico Business Tax Identification Number (BTIN). Engaging in business means carrying on any activity for direct or indirect benefit. There is no fee to register or obtain a BTIN. You can apply online through the Taxpayer Access Point (TAP) portal or submit Form ACD-31015 (Business Tax Registration) by mail or at a local district tax office with an appointment. Your single BTIN registration covers reporting and paying taxes for these state programs if they apply to your business:

• Compensating Tax
• Governmental Gross Receipts Tax
• Gross Receipts Tax
• Interstate Telecommunication Gross Receipts Tax
• Leased Vehicle Gross Receipts Tax and Surcharge
• Non-wage Withholding Tax
• Wage Withholding Tax

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Gross Receipts Tax (GRT) and Compensating Tax

New Mexico does not levy a standard retail sales tax on consumers. Instead, the state imposes a Gross Receipts Tax (GRT) directly on businesses for the privilege of doing business in New Mexico. While the legal liability rests on the seller, it is common for businesses to pass the GRT on to the purchaser. If you pass the GRT on to your customer, you are required to state it separately on the invoice.

Businesses without a physical presence in New Mexico, including remote sellers and marketplace providers, are subject to GRT if they recorded at least $100,000 of taxable gross receipts sourced to New Mexico in the previous calendar year, pursuant to Section 7-1-14 NMSA 1978. TRD recommends filing and paying GRT electronically through the Taxpayer Access Point (TAP) portal.

Your GRT rate varies across the state because the total rate combines state, county, and municipal increments. In general, businesses apply the location code and tax rate where their goods or the product of their services are delivered, though exceptions apply for professional services. Starting July 1, 2025, GRT rates only change once a year in July, unless a special situation such as a natural disaster allows a county or municipality to change its rate in January.

New Mexico does not allow deductions for general business expenses under the Gross Receipts Tax. However, specific statutory exemptions and deductions exist, some of which require executing a Non-Taxable Transaction Certificate (NTTC). Not all deductions require or have an NTTC associated with them. TRD also administers Compensating Tax programs. Gross receipts include the total amount of money or value of other consideration received from the following taxable activities:

• Selling property in New Mexico
• Leasing or licensing property employed in New Mexico
• Granting a right to use a franchise employed in New Mexico
• Performing services in New Mexico, or performing services outside New Mexico when the product of the service is initially used in New Mexico
• Selling research and development services performed outside New Mexico when the product is initially used in New Mexico

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Corporate Income, Franchise, and Pass-Through Entity Taxes

Corporations operating in New Mexico face both registration and income tax obligations. Every corporation must obtain a FEIN from the IRS and register with the New Mexico Secretary of State. All filings with the Secretary of State must be completed online at enterprise.sos.nm.gov using multi-factor authentication. The Secretary of State no longer accepts paper filings for any business applications, and walk-in hours at the Santa Fe office are available Monday through Thursday only.

If a corporation has gross receipts, compensating, or withholding tax to report, it must obtain a BTIN from the Taxation and Revenue Department. Even if a corporation has no liability for those transaction or payroll taxes and is not required to obtain a BTIN, it may still be required to file a New Mexico corporate income and franchise tax return. TRD also administers Pass-Through Entity tax programs.

If you close a corporation, dissolve it, or withdraw from doing business in New Mexico, you must file a final corporate income tax return with TRD when your annual return is due and request a Corporate Certificate of No Tax Due before contacting the Secretary of State. If you are purchasing or leasing an existing business, license, or permit as a successor in business, you can submit Form ACD-31096 (Tax Clearance Request) to obtain a Certificate of No Tax Due or Letter of Good Standing so you are not held liable for taxes owed by the prior owner.

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Employer Payroll Taxes, Withholding, and Workers' Compensation

Hiring employees in New Mexico triggers payroll reporting across both the Taxation and Revenue Department and the Department of Workforce Solutions. Under Section 7-3-3 NMSA 1978, an employer is anyone doing business in the state or deriving income from state sources who pays wages to an employee for services performed. An employee includes any New Mexico resident performing services inside or outside the state, as well as nonresidents performing services within New Mexico.

Any employer who withholds a portion of an employee's wages for federal income tax must also withhold New Mexico state income tax, including employers of certain agricultural workers. Limited exceptions exist for specific nonresident employees, active-duty military service income, and income wholly earned by an enrolled Native American member of a New Mexico federally recognized Indian nation, tribe, or pueblo while living and working on those tribal lands.

Employers report and pay state wage withholding using Form TRD-41414 (Wage-Withholding Tax Return). If you withhold New Mexico tax from pensions, annuities, or gambling winnings, you report those amounts separately on Form TRD-41409 (Non-Wage Withholding Tax Return). Annual income and withholding information returns must generally be reported to TRD by the last day of February.

Every employer and employee covered by the New Mexico Workers' Compensation Act is assessed a quarterly administrative fee under Section 52-5-19 NMSA 1978 to fund the Workers' Compensation Administration. TRD collects this fee on Form TRD-41431 (Workers' Compensation Fee Return and Employees' Quarterly Wage and Withholding Report). Paying this statutory fee does not provide insurance coverage. Employers must still purchase a separate workers' compensation insurance policy.

By our calculation from the New Mexico Taxation and Revenue Department fee schedule, the combined employer and employee Workers' Compensation administrative fee totals $4.80 per covered worker per quarter ($19.20 per worker annually) from July 1, 2025 to July 1, 2028, rising from the pre-July 2025 combined rate of $4.30 per quarter.

State Unemployment Insurance (UI) is administered separately by the New Mexico Department of Workforce Solutions. UI benefits are financed entirely through employer payroll taxes and are never deducted from employee paychecks. Employers register for an Employer Account Number and file wage reports through the NMDWS online portal, which is open daily from 4:00 AM to 7:00 PM.

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Federal Business and Self-Employed Taxes

Alongside New Mexico state filings, every business must meet federal IRS filing requirements. All businesses except partnerships must file an annual federal income tax return. Partnerships file an annual information return. Because federal income tax is a pay-as-you-go system, business owners who do not have sufficient tax withheld from wages must make regular estimated tax payments throughout the year.

Sole proprietors and independent contractors are subject to federal self-employment (SE) tax, which covers Social Security and Medicare obligations. You must pay SE tax and file Schedule SE (Form 1040 or 1040-SR) if your net earnings from self-employment are $400 or more, or if you receive $108.28 or more in wages from a church or qualified church-controlled organization that elected an exemption from Social Security and Medicare taxes.

If you have employees, federal employment taxes include federal income tax withholding, Social Security and Medicare taxes, and Federal Unemployment Tax Act (FUTA) taxes, reported on Forms 940, 941, 943, 944, or 945. If you pay independent contractors for services performed for your trade or business, you may also be required to file information returns such as Form 1099-MISC.

• IRS: Filing and paying your business taxes
• IRS: Business taxes

New Mexico Small Business Tax Compliance Checklist

Our team put together this step-by-step compliance checklist so you can set up your New Mexico tax accounts in the exact order state and federal agencies require.

• Step 1: Register your legal entity online with the New Mexico Secretary of State at enterprise.sos.nm.gov (required for corporations and LLCs. No paper filings are accepted).
• Step 2: Apply for a Federal Employer Identification Number (FEIN) from the IRS if you operate a corporation, partnership, LLC, or sole proprietorship with employees.
• Step 3: Register for a free New Mexico Business Tax Identification Number (BTIN) via the TRD Taxpayer Access Point (TAP) portal or by submitting Form ACD-31015.
• Step 4: Check your delivery location codes on the TRD Gross Receipts Location Code and Tax Rate Map and set up separate invoice line items if you pass GRT on to customers.
• Step 5: If hiring employees, open an Unemployment Insurance account with the New Mexico Department of Workforce Solutions between 4:00 AM and 7:00 PM to get your Employer Account Number.
• Step 6: File quarterly Workers' Compensation fees on Form TRD-41431, submit state wage withholding on Form TRD-41414, and file annual withholding information returns by the last day of February.

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Special Tax Registrations, Audits, and Flat-Price Filing

Certain industries require specialized tax registrations beyond a standard BTIN. Businesses that produce oil, natural gas, liquid hydrocarbons, carbon dioxide, helium, or other non-hydrocarbon gas must obtain an Oil and Gas Reporting Identification Number (OGRID) from the TRD Oil and Gas Bureau. Payors who only remit withholding tax on oil or gas proceeds to nonresidents for wells in New Mexico do not need a BTIN and instead file Form RPD-41284 (Quarterly Oil and Gas Proceeds Withholding Tax Return).

Additional special registrations using Form ACD-31015 are required for businesses selling cigarettes, tobacco products, liquor, gasoline, or special fuels, as well as businesses engaged in water production or severance and resources activities. TRD also administers the Cannabis Excise Tax, Insurance Premium Tax, and Health Care Delivery and Access Assessment. At the federal level, businesses may owe federal excise taxes on fuel, environmental categories, or heavy highway vehicles weighing 55,000 pounds or more (Form 2290), general excise categories (Form 720), or wagering activities (Forms 730 and 11-C).

If you discover an error on a previously filed New Mexico Gross Receipts Tax return, you must file an amended return and pay any additional tax due, or submit a refund request if you overpaid. Business owners who want to verify their tax liability or resolve past reporting errors can also request a Managed Audit through the Taxation and Revenue Department.

Aldro is the cheapest way to get your business taxes done: $399 flat, with bookkeeping at $20 a month.

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• IRS: Business taxes