New Mexico LLC Taxes Explained: Pass-Through Income Tax, GRT and Withholding
New Mexico LLC Taxes Explained: Pass-Through Income Tax, GRT and Withholding
A New Mexico single member LLC usually does not pay state income tax at the entity level. The profit flows through to you and is taxed on your personal return. The part that catches owners off guard is everything else: the LLC still registers with the state, reports gross receipts tax on its sales, and withholds tax if it has employees or nonresident owners. This guide covers the New Mexico LLC tax picture in the order you will meet it, from the default setup to the elections that change the math.
Most people searching for New Mexico LLC taxes are trying to answer four questions: how a New Mexico single member LLC is taxed by default, what registration an NM single member LLC needs, how gross receipts tax differs from a sales tax, and when an LLC pays entity-level tax. Each answer below uses the figures the state publishes and flags what you should confirm before filing.
Informational content, not legal or tax advice. Tax treatment depends on your facts, your entity election, and where you do business. Talk with a New Mexico CPA or attorney before you rely on anything here.
The default rule: a single member LLC is a pass-through
Unless you elect otherwise, a New Mexico LLC is a pass-through for state income tax purposes. In practice that means:
- The LLC's profit is reported on the owner's New Mexico personal income tax return, Form PIT-1.
- The LLC pays no New Mexico income tax at the entity level.
- The LLC owes no franchise tax. The $50 annual corporate franchise tax applies to corporations and to LLCs that elect corporate treatment, not to a default LLC.
- The LLC files no annual or biennial report with the Secretary of State. The $50 Articles of Organization fee is the formation charge, and there is no recurring Secretary of State report to file.
Your personal tax bill then depends on how much net profit you take onto your own return. New Mexico's personal income tax is graduated, with rates from 1.5% to 5.9% for tax years beginning on or after January 1, 2025. For single filers, the 5.9% top rate applies to taxable income above $210,000.
Federal treatment is separate. For federal purposes, a single member LLC with no election is generally disregarded, so its income appears on your federal return, while a multi member LLC is generally taxed as a partnership. Your CPA can confirm how the federal and state pieces fit together for your situation.
Registering for the Business Tax Identification Number
New Mexico has no general statewide business license. What it does require is tax registration. Once the LLC exists with the Secretary of State, register with the Taxation and Revenue Department (TRD) to get a Business Tax Identification Number, or BTIN, which the state previously called a CRS number. The BTIN costs nothing.
Your LLC needs the BTIN even though it pays no entity income tax, because that number is how you report gross receipts tax and handle withholding. Treat the BTIN as a tax registration, not a license. Having one does not mean you have met every requirement for your trade. Some professions need an activity-specific license from the Regulation and Licensing Department, and cities and counties may require their own local business registration.
Register through TRD at tax.newmexico.gov. TRD's guidance on who must register is at who-must-register-a-business.
Gross receipts tax: New Mexico's substitute for a sales tax
New Mexico has no sales tax. It levies a gross receipts tax (GRT) on business receipts instead. The tax is imposed on the seller, so your LLC is the party that reports and remits it to TRD. The current rates are:
| Item | Figure |
|---|---|
| State gross receipts tax rate | 4.875% |
| Combined state and local rates | 5.25% to 9.4375% |
| Schedule covering those combined rates | July 1, 2026 to June 30, 2027 |
The combined rate depends on the local governments where your receipts are sourced, because cities and counties add their own rates on top of the state rate. Before you set prices or file a return, confirm the rate that applies to your location and to the filing period. The combined rate schedule changes on a set calendar, so do not carry a rate from a previous period into a new one.
Withholding: employees and nonresident owners
Withholding is where single member LLCs most often run into trouble. Two situations trigger it:
- Employees. If the LLC has employees, it must withhold New Mexico personal income tax from their wages and register with TRD for that obligation. Confirm the deposit schedule and filing forms with TRD before your first payroll, because the filing frequency is set by the agency and not by this guide.
- Nonresident owners. An entity must withhold New Mexico tax for nonresident owners unless pass-through entity tax has been paid for them. A single member LLC owned by someone who lives outside New Mexico can hit this rule even if the business operates entirely in the state.
If you have an out-of-state owner, ask TRD and your CPA how the withholding obligation works before you accept money from that owner or make a distribution.
Electing corporate tax treatment
An LLC can elect to be taxed as a corporation. An LLC that does so files Form CIT-1, pays a flat 5.9% corporate income tax on taxable income for tax years beginning on or after January 1, 2025, and owes the $50 annual corporate franchise tax, which is reported on the same form.
The corporate election adds an entity-level income tax that the default pass-through avoids. It can make sense in some situations, but it is a structural decision with consequences for distributions and owner compensation. Ask a CPA to model it with your actual numbers before you choose.
Pass-through entity tax (PTE): for multi member LLCs
Multi member LLCs and S corporation style LLCs may elect entity-level pass-through entity tax (PTE) at 5.9%, reported on the PTE return. The election has three features that matter:
- It is annual. You make the choice for each tax year.
- It binds all owners. You cannot elect it for some owners and skip others.
- It excludes single owner LLCs. If you are the only member, PTE is not available to you.
Whether PTE helps depends on the owners' situations, including any nonresident owners who would otherwise trigger withholding. If you are a single member LLC, you can skip this section. If you have co-owners, confirm the election timing and mechanics with TRD and a CPA before the tax year you want to elect.
Comparing the three setups
| Feature | Default pass-through | Corporate election (CIT-1) | PTE election |
|---|---|---|---|
| Who it fits | Most single member LLCs | LLCs that want corporate treatment | Multi member and S corporation style LLCs, not single owner LLCs |
| Entity-level New Mexico income tax | None | Flat 5.9% | 5.9% at the entity level |
| Annual franchise tax | None | $50 on Form CIT-1 | Confirm with a CPA |
| Registration and GRT | BTIN and GRT reporting | BTIN and GRT reporting, plus CIT-1 | BTIN and GRT reporting, plus the PTE return |
Local registrations and other costs to plan for
Cities and some counties charge their own flat annual registration for businesses that operate inside their boundaries. These charges are separate from the state, and the amounts vary by jurisdiction. This guide does not list local figures, so check with your city or county clerk before you open for business.
On the state side, the costs are modest. The Articles of Organization cost $50. Expedited service may be available under rule 12.3.1.9 NMAC: $150 for same business day service when the filing is received before 2:00 p.m., or $100 for two business day service, paid separately and nonrefundable. Confirm availability with the Secretary of State. A name reservation costs $20 and lasts 120 days, and it cannot be renewed. Confirm all current figures on the Secretary of State's site at enterprise.sos.nm.gov.
Common mistakes to avoid
- Assuming no annual report means no state filings. The LLC still needs its BTIN and must report gross receipts tax.
- Filing a separate DBA with the state. New Mexico has no statewide DBA or assumed name registration. If the LLC will trade under a different name, state that name in the Articles of Organization.
- Forgetting withholding for an out-of-state owner. The obligation applies even when the owner never visits New Mexico.
- Pricing without the local rate. The combined GRT rate varies by location, so a single statewide number will not protect your margins.
- Looking for PTE as a single owner. The election excludes single owner LLCs.
Where to confirm each piece
Use the official agency for each question rather than relying on a summary, including this one:
- BTIN, gross receipts tax, withholding, PIT, CIT-1 and PTE: New Mexico Taxation and Revenue Department at https://www.tax.newmexico.gov/
- Articles of Organization and online filing: New Mexico Secretary of State at https://www.sos.nm.gov/business-services/, with filings made through the SOS Enterprise Business Filing System at https://enterprise.sos.nm.gov/
- Business name search: https://enterprise.sos.nm.gov/search
- Free business advising: New Mexico Small Business Development Center at https://www.nmsbdc.org/
- Federal and local resources for New Mexico: U.S. Small Business Administration at https://www.sba.gov/district/new-mexico
Bottom line
For most New Mexico single member LLCs, the state income tax story is simple: the profit is taxed on your personal return, and the LLC pays no entity-level income tax or franchise tax. The work sits in the registrations around that rule. Get your BTIN, set up gross receipts tax at the correct local rate, and make sure withholding is in place before you hire or accept money from a nonresident owner. Revisit the corporate and PTE options only when your facts justify the extra complexity.
This guide is informational and is not legal or tax advice. A qualified New Mexico CPA or attorney should review complex situations, including multi member operating agreements, employees working across state lines, and any decision to elect corporate treatment or PTE.