S-Corporation Income Tax
New Mexico recognizes the federal S-election, and New Mexico S corporations are not required to pay tax to the state. However, individual S corporation shareholders will owe tax on their share of the corporation’s income
S corporations are subject to New Mexico franchise tax of $50, due on the 15th day of the third month after year-end.
LLC/Partnership Income Tax
LLCs and partnerships are not required to pay income tax to New Mexico. Instead, income from the business is distributed to individual LLC members or partners, who then pay New Mexico income tax on that amount with their personal return.
C-Corporation Income Tax
New Mexico taxes C corporation net income at a series of marginal rates:
- total net income not over $500,000 = 4.8% tax
- total net income over $500,000 but not over $1,000,000 = $24,000 plus 6.4% of net income over $500,000; and
- total net income over $1,000,000 = $56,000 plus 7.6% of net income over $1,000,000.
C corporations are also subject to New Mexico franchise tax of $50. Tax returns are due on the 15th day of the third month following business’ year-end.
Corporate Franchise/Privilege Tax
New Mexico’s franchise tax is a flat annual fee of $50 that must be paid by all New Mexico corporations, including S corporations.
If your business was formed or is located in another state, but generates income in New Mexico, it may be subject to New Mexico taxes. The rules for taxation of multistate businesses, including what constitutes nexus with a state for the purpose of various taxes, are complicated. If you run such a business, you should consult with a tax professional.