How Has New Mexico Simplified Sales Tax?

Radhika Akhil
May 16, 2023

This blog was last updated on May 16, 2023

New Mexico used to be one of a minority of states that applied origin-based local sales tax sourcing while also not applying a complimentary “seller’s use” tax to its local sales tax. Both of these things have changed in recent years. Today, New Mexico joins the majority of states in applying a destination-based tax system with local rates that apply identically regardless of where the seller may be located.

Note, however, that unlike other states that use a traditional sales/use tax system, New Mexico instead follows a Gross Receipts Tax system. In the traditional sales/use tax system, a seller essentially adds a charge on top of the selling price (a percentage of the value of the transaction), which is eventually remitted to the state. On the other hand, a gross receipts tax is a percentage of revenue that the seller must pay to the state, which ultimately comes out of the seller’s total earnings. To recoup this amount, in most cases the seller passes this amount to the customer. It is only from the perspective of the buyer that the effect of the gross receipts tax resembles a standard sales tax scheme.

As a corollary, applying a gross receipts tax system makes services generally taxable as well in New Mexico, which is not the case for the majority of states where services are usually exempt.

New Mexico is also one of the states that imposes only a minimum revenue threshold, which requires a business to register as a response to Wayfair, whereas other states have both a minimum revenue threshold and a minimum transaction count threshold. In New Mexico, the minimum revenue threshold requiring a business to register is $100,000 in annual gross revenue in the previous calendar year.

When you consider these simplifications, alongside its long-standing straightforward tax base (a thumb rule of “taxable unless otherwise”), New Mexico stands out as a state where compliance is fairly manageable.

Take Action

Need more details on how New Mexico approaches sales tax? Reach out to learn the ins and outs.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Radhika Akhil

Radhika Akhil is Regulatory Counsel in the Sovos Regulatory Analysis and Design Department. Radhika focuses on U.S. sales tax law and Canada transaction taxes and fees. Radhika obtained two B.A. degrees from Boston University and a J.D. from Suffolk University. She is a member of the Massachusetts Bar and the New York Bar.
Share this post

North America Unclaimed Property
February 10, 2025
Delaware Announces 2025 VDA Invitation Dates

This blog was last updated on February 10, 2025 Mark your calendars – April 11, 2025 and August 15, 2025 are this year’s anticipated release dates for the Delaware’s Secretary of State (SOS) VDA program invitations. In the event that an organization receives an invitation to participate in the Voluntary Disclosure Agreement (VDA) program  , […]

North America Sales & Use Tax
February 6, 2025
The Tariff and Sales Tax Mishmash – Untying the Mess

This blog was last updated on February 6, 2025 Talk of tariffs dominates the current news cycle with some commentators suggesting that tariffs will spell disaster for our economy while others say the exact opposite. We’ve seen the stock market sometimes fluctuate as tariffs are announced but later suspended, leaving us to wonder whether an […]

retailer dtc wine shipping
North America ShipCompliant
February 6, 2025
Retailer DtC Wine Shipping: The Time Has Come

This blog was last updated on February 6, 2025 By Tom Wark, Executive Director, National Association of Wine Retailers We are often reminded by the media and those in the wine industry—as well as by wine enthusiasts—that the three-tier system of alcohol distribution in most states hinders consumer access to the expansive number of wines […]

Montana 1099-DA
North America Tax Information Reporting
February 5, 2025
State Filing Alert: Montana’s New 1099-DA Requirements for Crypto Brokers

This blog was last updated on February 5, 2025 Reporting digital asset transactions on Form 1099-DA just got a little more complicated. For 2025 transactions, crypto brokers that file Form 1099-DA with the IRS will be required to file the 1099-DA with the State of Montana. This makes Montana the first state to introduce a […]

North America ShipCompliant
January 23, 2025
DtC Wine Shipping in 2024: A Year-in-Review

This blog was last updated on January 28, 2025 The direct-to-consumer (DtC) wine shipping channel faced a storm of challenges in 2024, navigating some of the toughest market conditions in over a decade. As inflation tightened wallets and consumer behaviors shifted, the industry recorded its steepest declines in shipment volume and value since the inception […]