New Mexico LLC Taxes
After you start a New Mexico LLC, it's important to understand your tax obligations. The taxes your LLC owes depend on how it's classified, state and local rules, whether you sell taxable goods or services, and whether you have employees.
LLC Pass-Through Taxation
By default, LLCs don't pay taxes directly. Instead, the LLC members report the income (or losses) on their personal Form 1040 tax return. This is called pass-through taxation — tax responsibility "passes through" the LLC to its owners.
How Are LLCs Taxed in New Mexico?
By default, a New Mexico LLC is taxed by the IRS based on the number of members:
- An LLC with 1 owner (Single-Member LLC) is taxed like a Sole Proprietorship
- An LLC with 2+ owners (Multi-Member LLC) is taxed like a Partnership
These are the "default" statuses — automatically applied based on member count. You can also elect to have your LLC taxed as a Corporation (S-Corp or C-Corp) by filing extra paperwork with the IRS.
Single-Member LLC (default)
The IRS treats Single-Member LLCs as Disregarded Entities — the LLC doesn't file its own federal return. Instead, the owner reports LLC income on their personal Form 1040 (Schedule C if owned by an individual).
Multi-Member LLC (default)
Multi-Member LLCs file a Form 1065 Partnership Return and issue a Schedule K-1 to each member. Each member then reports their share of profits on their personal Form 1040.
Husband & Wife LLC
Electing Corporate Taxation
- S-Corporation: File Form 2553 with the IRS. Can reduce self-employment taxes once the LLC has consistent profits (generally $70,000+ net income per member). Speak with an accountant first.
- C-Corporation: File Form 8832 with the IRS. Uncommon for small LLCs. Primarily useful for large employers offering healthcare fringe benefits.
New Mexico State Income Tax
New Mexico has a state income tax at rates of 1.7%–5.9% (graduated). LLC members report their share of LLC profits on their New Mexico state tax return.
Single-Member LLC owners file New Mexico Form PIT-1 and include LLC income. Multi-Member LLCs file New Mexico Form PTE (Pass-Through Entity Return) and issue NM K-1s to members.
Contact the New Mexico Taxation and Revenue Department at 505-827-0700 for more information.
New Mexico Special LLC Taxes
New Mexico Gross Receipts Tax (GRT)
New Mexico uses a Gross Receipts Tax (GRT) instead of a traditional sales tax. The GRT is imposed on the seller (not the buyer) and applies to virtually all sales of goods and services in New Mexico.
- State GRT rate: 4.875%
- Local rates add 0.125%–4.3125%, bringing combined rates to 5%–9.1875%
- Register for a CRS (Combined Reporting System) Number with the New Mexico Taxation and Revenue Department
- Unlike traditional sales tax, the GRT applies to services as well as goods
Local Income Tax
You and/or your LLC may also need to file and pay income taxes with your local municipality (city, county, etc.). Contact your local government or hire an accountant to confirm local requirements.
New Mexico Sales Tax
If your LLC sells taxable products (and sometimes services) in New Mexico, you may need to collect sales tax and register for a Seller's Permit (also called a resale license or sales tax permit).
New Mexico does not have a traditional sales tax. Instead, it uses a Gross Receipts Tax (GRT) — see special taxes below.
Register for New Mexico Seller's Permit →
Contact the New Mexico Taxation and Revenue Department at 505-827-0700 with questions.
New Mexico LLC Payroll Taxes
If your New Mexico LLC has employees, you must handle payroll taxes, which include:
- Federal income tax withholding
- New Mexico state income tax withholding
- Social Security and Medicare taxes (FICA)
- Federal unemployment tax (FUTA)
- New Mexico state unemployment tax (SUTA)
Payroll calculations are complex — most LLC owners hire a payroll service or accountant.
New Mexico Tax Agency Contact
New Mexico LLC Taxes — FAQs
Read the step-by-step formation guide with filing fees, processing times, and annual report deadlines.