Operating a business in New Mexico requires a solid understanding of the state's tax framework. The base state sales tax rate is 5%, with local jurisdictions adding up to 4.313%. LLC formation costs $50 in 2026.
Economic Nexus in New Mexico
Remote sellers must collect New Mexico sales tax if they exceed $100,000 in annual sales within the state. This threshold has been in effect since 2019-07-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The New Mexico Taxation and Revenue Department enforces these provisions and provides registration guidance at https://www.tax.newmexico.gov.
LLC Formation in New Mexico (2026)
Forming an LLC in New Mexico costs $50 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. New Mexico imposes a state income tax, which affects pass-through LLC taxation.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the New Mexico Taxation and Revenue Department.
Key Tax Rules
• New Mexico uses a Gross Receipts Tax (GRT) instead of a traditional sales tax.
• The state GRT rate is 5.0%, with local additions up to 4.313%.
• Groceries were made exempt from GRT starting in 2025.
• The GRT applies to services as well as tangible goods.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in New Mexico: groceries, prescription drugs, medical services. Businesses should maintain proper documentation for exempt transactions.