Does New Mexico charge sales tax on services?
by January 12, 2024
The majority of U.S. states require merchants to charge sales tax on tangible personal property (TPP), otherwise known as physical goods. In addition, many states have started tax services as well, and New Mexico is no exception.
While New Mexico does not have a sales tax, the state does have a gross receipts tax. This functions similarly to a sales tax. This tax is imposed on persons engaged in business in New Mexico.
Here’s what merchants need to know about taxing services in the state of New Mexico, which has a gross receipt tax rate of 5.125%.
Does New Mexico charge sales tax on services?
Most services performed in New Mexico are subject to gross receipts tax. This includes professional services offered such as architectural work and consulting services. These services are exempt from gross receipts tax:
- Receipts from feeding, pasturing, penning or handling livestock
- Receipts from dues and registration fees of nonprofit social, fraternal, political, trade, labor or professional organizations and business leagues
- Receipts of insurance companies or any agent from premiums for surety bonds or insurance policies
- Receipts from the sale or provision of interstate telecommunications services subject to the Interstate Telecommunications Gross Receipts Tax Act
- Receipts of a gas or electric utility owned or operated by a county, municipality or other political subdivision of the State of New Mexico from connect, disconnect, installation or stand-by charges
Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be subject to state sales tax. For an in-depth look at New Mexico sales tax, TaxJar’s guide to sales tax in New Mexico and the New Mexico Taxation and Revenue website has more details.
How to stay compliant with sales tax when you sell services
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time. TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and makes your job simple. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
