New Mexico Sales Tax 2023 - 2024
New Mexico sales tax is a complex issue for many sellers. With changes to state sourcing rules, local compensating taxes, and economic nexus, it's important for businesses that sell into the state to understand their reporting and collection obligations.
New Mexico sales tax is levied on a variety of goods and services. These include tangible products (like physical items, electricity, and manufactured homes), and digital products (like media streaming services and eBooks). However, there are many exceptions to these rules. It’s best to check with New Mexico Department of Revenue if you’re not sure whether something is taxable.
New Mexico is an origin-based sales tax state, meaning the seller is taxed on its gross receipts – not the buyer. New Mexico Sales Tax rate is 5.125%, and municipalities can impose local rates of up to 4.125% based on the location of the sale. The tax applies to all sales, including services and online purchases. The seller must register to collect the tax and maintain detailed financial records. It must also file sales tax returns quarterly or monthly. The returns must be accurate and detailed. Those who fail to file or report sales tax may be subject to penalties and audits.
Businesses required to collect New Mexico sales tax must register with the state. This requirement is based on having a physical presence in the state, or what’s known as economic nexus. Also, sellers with a representative in the state (like an affiliate) must collect and remit New Mexico sales tax.
New Mexico Sales Tax Exemption
Generally, all tangible products, including cars, furniture, and appliances, are subject to the tax. However, some items are exempt, such as gasoline and groceries. Services are also taxable, and this includes professional services like those provided by lawyers, architects, and landscapers. Digital products, such as music streaming and eBooks, are also taxable in the state.
When a customer presents a valid resale certificate, they’re exempt from paying New Mexico sales tax. However, you should always check whether the buyer is eligible for this exemption before allowing them to purchase. Failure to do so can result in a penalty of up to 20% of the tax due.
New Mexico Sales Tax Due Dates
New Mexico sales tax returns and payments are due on the 25th day of the month following the reporting period. However, if that date falls on a weekend or holiday, the return is due the next business day. Many businesses choose to hire an accountant, bookkeeper, or sales tax automation software provider to manage their New Mexico gross receipts, tax filings, and compliance requirements.
