New Mexico Franchise Tax: Everything You Need to Know



New Mexico franchise tax differs from most states because it depends on the level of income generated. There are three levels of franchise tax based on how much money you make: $100,000 and under, $101,000-$500,000, and more than $501,000. For example, if you earn $50,000 per year and you live in Albuquerque, you pay $1,942. If you earn $150,000 per year and live in Santa Fe, you pay $2,814. And if you earn $200,000 per year and reside in Las Vegas, you owe $3,624.

Businesses with annual gross revenue of $250,000 must file New Mexico Business Income Tax returns.

What business taxes are there in New Mexico?

The state of New Mexico does not have an individual income tax but a corporate income tax. This means that companies must pay taxes on their profits regardless of where those profits come from. In fact, businesses are required to report their taxable income to the state every quarter. If you fail to do so, you could face penalties.

New Mexico charges a flat tax of 3.5 percent on gross receipts. Gross receipts include sales plus certain fees and commissions. So, if you sell $100 worth of goods, you owe the state $3.50. You don’t have to worry about paying taxes on interest or dividends because those items aren’t considered part of your gross receipts.

If you make $1 million in one year, you will owe $35,000. However, there is a way around this. You won’t owe anything if you earn less than $25,000 annually. If you earn between $25,001 and $75,000, you will owe 2.5 percent of your gross receipts. Anything over $75,000 will cost you 5 percent.

What else taxes businesses in New Mexico?

New Mexico imposes a franchise tax on most businesses. Franchise taxes are imposed based on a percentage of gross receipts. They are generally levied every quarter. In addition, certain types of income are exempt from taxation. For example, wages earned by employees are not subject to taxation, nor are dividends received from corporations. However, some forms of compensation, such as bonuses, commissions, interest, rents, royalties, and capital gains, are taxable.

The amount of the franchise tax depends on the type of business being taxed. Five different categories of businesses are subject to franchise tax in New Mexico. These include:

• Banks

• Insurance companies

• Investment management firms

• Real estate investment trusts

• Securities brokers


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What business types can corporate and franchise tax be applied to?

New Mexico imposes both a corporate income tax and a franchise tax. These taxes are applied only to certain types of businesses. Corporations are classified into three categories based on how much income passes to owners: type, Conventional, and S-corporation. Each type of corporation is subject to different rates of taxation.

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Corporations are required to file annual reports with the state, including information about shareholders and directors. This report must include the name of each shareholder and director, address, occupation, and date of birth. Shareholders and directors are personally liable for any debts incurred by the corporation.

A franchise tax is imposed on every corporation doing business within the state. The amount of the tax depends on the number of employees and the business’s gross receipts.

The following table provides the basic definitions of the terms used in the New Mexico Corporation Code.

Ctype – Any corporation whose shares are held directly by one person or persons.

Conventional – Any corporation whose shares or interests are owned by one or more individuals, partnerships, associations, trusts, estates, or other legal entities.

Scorporation – Any corporation whose shares, interests, or securities are owned by one or several corporations.

New Mexico state business income tax

The New Mexico State Board of Finance says there are two types of taxes in New Mexico. One is called the Franchise Tax, and the other is the Corporate Income Tax.

Corporations are taxed based on how much money they make within the state. There are many exceptions to this rule. Some companies do not fall under the corporate income


Corporations taxes you owe, you have to file a federal income tax form. This includes both personal income tax and corporate income tax forms.

An S Corporation doesn’t pay any state tax. If you own 50% or less of the corporation, you are required to report the profits on Form 1065.

A Partnership pays taxes based on each partners’ share of the profits. Each partner reports his/her share of the profits on Schedules K1.

All businesses must file quarterly federal income and payroll tax returns. These include Forms 941, 942, 943, 945, 947, 948, 949, 950 and 951.

Every business needs to keep records. These include invoicing, check stubs, credit card statements, banking statements, etc.

What type of taxes will you owe on New Mexican business income?

Most states impose some sort of tax on businesses. Depending on where you do business, it could be a flat percentage of your annual gross receipts or a combination of sales and property taxes. In addition, some states levy additional taxes on certain types of businesses, such as corporations, partnerships, or LLCs.

New Mexico imposes both corporate and franchise tax. A corporation is a legal entity that exists separately from its owners. If you incorporate in New Mexico, you’ll pay a 3% tax on your net taxable income. This includes profits earned from selling goods or providing services within the state. You must file a return every year and report your total income. Franchise taxes apply to entities operating out of New Mexico but conducting most of their activities outside the state. These include companies like real estate agents, insurance agencies, and professional services firms. They may be subject to a 2% tax on their gross receipts, plus another 4% on their net earnings.

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If you run a business in New Mexico without incorporating, you’ll still have to pay taxes based on how much money you make. For example, you won’t owe any taxes if you earn less than $500,000 annually. However, if you earn over $1 million, you’ll pay a 7% tax on your net income.

The amount of tax you pay depends on several factors, including the number of employees you employ, whether you use independent contractors, and whether you provide health care benefits to your workers.are taxed differently than individual taxpayers. They pay corporate income taxes based on net income, including profit and loss. In addition, corporations must pay federal payroll taxes and state franchise taxes.

An S Corporation is similar to partnerships. It is a legal form used primarily in small businesses. An S corporation operates just like a regular corporation except it does not file separate returns. Instead, the owners report their share of the corporation’s earnings on their personal tax return.

A Standard LLC is like a Sole Proprietorship. Entrepreneurs and freelancers typically use this type of entity. Like a sole proprietorship, an LLC is owned by one person. However, unlike a sole proprietorship, the owner cannot operate the business without incorporating it.

Corporate Income Tax

New Mexico levies a corporate income tax on businesses operating within the state. Companies are taxed based on their total net income. This includes all income earned by the company regardless of where it is generated. For example, if a company earns $100,000 in revenue from sales in California, it still owes New Mexico taxes on the entire amount.

Franchise Tax

New Mexico law requires corporations engaged in business within the state to pay a franchise tax. This includes companies incorporated outside New Mexico but do business here. Companies that choose not to register with the PRI will not be subject to the franchise tax.

However, companies that choose not to register will still be required to file reports with the PRC. They will also be responsible for paying fees for each report filed. These fees vary depending on how much information is reported. For example, companies that provide financial statements will be charged $100 annually. Companies providing general corporate information will pay $150 annually. Companies providing detailed information about subsidiaries will pay $300 annually.

The franchise tax is calculated based on net income earned during the calendar year. Net income is defined as total revenue less costs associated with operating the business minus certain deductions. Franchise tax rates range from 0% to 3%. Rates increase incrementally with the amount of net income generated. Companies with no taxable income pay no franchise tax.


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Frequently Asked Questions

How do franchise taxes work

Franchise Taxes are taxes imposed on businesses that operate under a franchised name. These taxes are generally based on the gross revenue generated by the business. Franchise Tax Rates vary depending on the type of business and where they are located. There are four types of franchise tax rates:

• State Rate – This rate applies to any company doing business in the state.

• City Rate – This rate applies to companies operating outside city limits.

• County Rate – This rate applies only to companies outside cities and counties.

• Local Option Rate – This rate applies if a local government imposes its own franchise tax rate.

The amount of franchise tax paid varies depending on the type of franchise and location. A company’s franchise tax liability may be calculated using either the net income or gross receipts method. Net Income Method (NIM)

To calculate the NIM, the following formula is used:

Net Income Gross Receipts x Franchise Tax Rate

Gross Receipts Total Sales + Cost of Goods Sold

Cost of Goods Sold Selling Price – Cost of Goods Sold

Selling Price Total Revenue / Number of Units Sold

Total Revenue Gross Profit + Other Revenues

Other Revenues Interest Expense + Depreciation Expense + Amortization Expense

Depreciation Expense Straight Line Depreciation Expense

What states have a franchise tax

1. California

California’s Franchise Tax Law was passed in 1933 and required businesses to pay taxes based on their net income. Net Income is defined as gross revenue minus costs of goods sold plus any expenses incurred.

2. Oregon

Oregon’s Franchise Tax Law was first enacted in 1935 and required businesses to pay sales tax on purchases of tangible personal property. Tangible Personal Property includes items such as furniture, machinery, vehicles, etc.

3. Washington

Washington’s Franchise Tax Law was originally enacted in 1937 and required businesses to pay both state and local sales tax on purchases of taxable services and tangible personal property. Sales tax rates vary depending on the type of business and location.

4. Nevada

Nevada’s Franchise Tax Law was enacted in 1939 and required businesses to pay a flat rate of 4% on their gross receipts. Gross Receipts are defined as total sales fewer returns, allowances, discounts, refunds, and credits.

5. Arizona

Arizona’s Franchise Tax Law was enacted in 1941 and required businesses to pay either a flat rate of 5%, 6%, or 8%. A flat Rate means that regardless of their money, they still owe the same amount.

6. New Mexico

New Mexico’s Franchise Tax Law was adopted in 1943 and required businesses to pay between 2-8% on their gross receipts.

7. Texas

Texas’ Franchise Tax Law was enacted on January 1st, 1965, and requires businesses to pay at least 2% on their gross receipts unless otherwise exempted.

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