New Mexico LLC Taxes
A low cost of living and easy access to gorgeous natural environments make New Mexico an inviting place to live and start a business. But, as more businesses open within the state, many new business owners find it difficult to navigate all the taxes affecting their ventures.
Regardless of the size of your business, if you operate a limited liability company (LLC) in New Mexico, you’ll need to stay up to date on your finances and pay federal, state, and local taxes. Our guide will help you understand which taxes you must pay for your New Mexico LLC.
Recommended: Schedule a free consultation with an accountant to stay on top of your taxes.
New Mexico LLC Taxes Owed
LLCs benefit from pass-through taxation, which means the business’s profits pass through to its members’ individual tax returns. As a result, your LLC itself doesn’t pay taxes to the federal government or the state of New Mexico. Instead, an LLC’s owners have to pay taxes on the portion of their income they earn from the LLC.
In New Mexico, LLC owners can expect to pay the following taxes:
Federal Taxes
Regardless of where your business is located, if you have an LLC within the United States, you will have to pay federal income taxes and federal self-employment taxes. These taxes are reported on your Form 1040.
Federal Self-Employment Taxes
It doesn’t matter if your LLC is a single-member LLC or a multi-member LLC; all LLC members must pay self-employment taxes on their share of the LLC’s profits. The self-employment tax rate is 15.3%.
Federal Income Taxes
Your federal income taxes will depend on your tax bracket, and the cutoffs for individual tax brackets, as well as the percent owed, will change each year.
New Mexico State Taxes
Each state has its own laws that dictate how it taxes individuals and businesses. New Mexico doesn’t have a state sales tax, for example, and instead levies a gross receipts tax. Below are the state taxes you need to know about when operating your New Mexico LLC.
New Mexico Income Taxes
The state income tax rate in New Mexico is 5.9%. This puts New Mexico near the middle when compared to other states’ income tax rates.
New Mexico Gross Receipts Tax
As mentioned above, New Mexico has a gross receipts tax instead of a state sales tax. The difference between these mainly comes down to who’s responsible for paying the tax. Consumers pay sales taxes while businesses pay gross receipt taxes.
However, it’s pretty common for New Mexico businesses to adjust their prices to reflect how much they must pay the state in gross receipts taxes. New Mexico’s gross receipts tax rate varies from 5% to just over 9% based on location, but averages out to around 7.5%.
For more information, visit the Gross Receipts Tax Overview page on the New Mexico Taxation and Revenue Department website.
Additional State Taxes
The New Mexico Taxation and Revenue Department oversees the collection of various state-specific taxes businesses may have to pay, depending on their location, industry, and number of employees. A few examples of these additional taxes include:
- Alternative Fuel Tax
- Boat Excise Tax
- Liquor Excise Tax
- Mineral Extraction Tax
- Motor Vehicle Excise Tax
For more information, visit the New Mexico Taxation and Revenue Department website.
New Mexico Local Taxes
Albuquerque's local laws and ordinances may differ greatly from those in Carlsbad. Regardless of where you live in New Mexico, we recommend you check with your local jurisdiction to ensure your business obtains the proper local permits and follows any local regulations that may impact its operations.
New Mexico LLC Compliance
You must obey New Mexico’s state and local laws in order to maintain your business in good standing.
New Mexico LLC Annual Report
Unlike other states, New Mexico doesn’t require LLCs to file an annual report or pay an annual fee to operate within the state. This can prove beneficial because you won’t have to take additional time or money away from your business to keep operating in New Mexico.
LLC taxes are complex. While our guide can provide you with important information, we recommend you schedule a free consultation with an accountant to ensure you handle your business taxes correctly.