New Mexico Sales Tax 2024

“The sales tax for businesses in New Mexico is 5.125%”

What Does The New Mexico Sales Tax 2024 For Businesses Mean?

While the state of New Mexico does not have a formal sales tax system, it does levy a gross receipts tax. Unlike a traditional sales tax system, this one taxes the vendor rather than the buyer.

New Mexico is an origin-based sales tax state, which means that sales tax rates are decided by the vendor’s location rather than the buyer’s location. Because all in-state buyers are charged the same sales tax rate regardless of their location, the origin-based approach to calculating sales tax is less complicated for sellers than the destination-based technique.

Read More: New Jersey Sales Tax 2022 For Businesses: A Complete Guide

How Much Is The New Mexico Sales Tax For Businesses?

Currently, the sales tax for businesses in New Mexico is 5.125%. The statewide gross receipts tax rate in New Mexico is 5.125 percent, and it has been in existence since 1933.

Municipal governments in New Mexico can additionally levy a local-option sales tax that ranges from 0% to 9.062 percent, with an average local tax of 2.258 percent (for a total of 7.383 percent when combined with the state sales tax). New Mexico law allows for a maximum local tax rate of 7.125 percent.

New Mexico Sales Tax Threshold Limit
5.125% $100,000 economic sales threshold limit

Do You Need To Collect New Mexico Sales Tax For Your E-commerce Business?

If you have a nexus in New Mexico, you must collect sales tax. When it comes to nexus, vendors can be physically or economically related to a state. Physical nexus is defined as having enough tangible presence or activity in a state to make it worthwhile to pay sales tax there. Economic nexus refers to exceeding a state’s economic threshold for total income or number of transactions.

Therefore, this is what the New Mexico sales tax for businesses is all about. Now the question arises: what type of goods and services are taxable in New Mexico? Let’s see.

Alan Chen, CPA at Freecashflow.io, helping eCommerce businesses with their tax and accounting

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What Types Of Goods And Services Are Taxable In New Mexico?

The first step in sales tax compliance is determining if your company’s products or services are taxable in New Mexico.

a. Traditional Goods Or Services

Physical items, such as furniture, home appliances, and automobiles, are all subject to sales tax in New Mexico.

Sales taxes are not charged on prescription medications, groceries, or gasoline.

New Mexico is considered unique as it requires all services to be subject to a gross receipts tax.

b. Digital Goods Or Services

A digital good or service is anything that is delivered electronically, such as an album downloaded from iTunes or a film purchased from Amazon.

Businesses in New Mexico are required to collect sales tax on digital goods and services.

Therefore, if you are dealing in any of these goods and services, you are subject to pay sales tax in New Mexico. Now let’s move on to see the tax collection and tax filing procedure in New Mexico.

c. Tax Collection

After you get your seller’s permit and start your business, you’ll need to figure out how much sales tax to charge different clientele. To avoid fines and the prospect of costly audits, business owners need to collect the correct rate of sales tax.

While calculating sales tax, you must account for the following categories of purchases:

  • Store Sales- Calculating sales tax for traditional business owners selling goods or services on-site is simple: all sales are taxed at the rate determined by the store’s location.
  • In-state Sales- New Mexico’s sales tax regime is known as destination-based sales tax. This means that long-distance sales in New Mexico are taxed based on the buyer’s address. The state, country, and city have to follow this regulation. 
  • Out-of-state Sales- Businesses with nexus in other states are only required to pay sales tax on out-of-state transactions. A company’s actual presence in another state is referred to as a “nexus.”

d. Tax Filing

You’re ready to file your sales tax return now that you’ve applied for your New Mexico seller’s permit and learned how to charge the correct amount of sales tax to all of your customers. You avoid fines and penalties by sticking to all deadlines.

Businesses in New Mexico are required to file sales tax forms and make sales tax payments online.

How Often Do You Need To File Sales Tax In New Mexico?

  • Semi-Annual Filing- If your company collects less than $1,200 in sales tax in six months, you should choose to file returns every two years.
  • Quarterly Filing- If your company receives less than $200 in sales tax every month, you should choose to file returns every quarter.
  • Monthly Filing- If your company collects more than $200 in sales tax every month, you must file returns every month.
  • Seasonal Filing- Businesses that only operate during a given season, such as firewood merchants or Christmas tree sales. You must specify the month(s) for which you will be filing and file every month for those months.
  • Temporary Filing- Typically, these are put up for one-time filing. The start and the end date must be fixed. A maximum of six months is allowed.

What If You Fail To File The Tax Return Before The Deadline?

Filing Deadlines

Unless it is a weekend or federal holiday, all New Mexico sales tax return deadlines fall on the 25th day of the month. In that instance, the deadline is pushed out to the next working day. The following is a list of the filing deadlines for this year:

Penalty For Late Filing

New Mexico levies a late filing penalty of 2% every month or partial month, up to a maximum of 20% of the tax recorded on the tax return until the tax is paid.

New Mexico additionally imposes a late payment penalty of 2% per month, up to a maximum of 20% of the unpaid tax if the tax has been filed at the very least.

Any unpaid tax or penalty is assessed by the state at a compounding interest rate of 4% per year, or 0.33 percent every month or half month.

Need Assistance With New Mexico Sales Tax

Please feel free to contact us if you have any questions about the New Mexico Sales Tax in 2024. FreeCashFlow is a tax and accounting agency with over 20 years of experience in Los Angeles, California. We will be able to serve you in the best way possible with our tax and accounting services.

Alan Chen, CPA at Freecashflow.io, helping eCommerce businesses with their tax and accounting

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