STATE RANKING #21

Quick facts: 

-New Mexico is one of the cheapest states to set up an LLC.

-New Mexico charges sales tax on services as well as retail products.

4.90%

State Income Tax

State
Income
Tax

5.90%

Cost of Setting Up A Business

state
business
tax

LOW

Property
Taxes

7.82%

Sales
Tax (average)

State Income Taxes in New Mexico

The state of New Mexico does have an individual income tax. Like most states with income tax, it is calculated on a marginal scale whose range is from 1.70% to 4.90% for 2020.

State Business Taxes in New Mexico

New Mexico’s corporate tax is calculated on a marginal scale whose range is from 4.8% to 5.9% for 2020. They only have 2 tax brackets, the highest bracket starting at $500,000.

In addition to the corporate tax, New Mexico also has a franchise tax. The franchise tax is a separate annual $50 fee applied to both C Corporations and S Corporations.

Sales Taxes in New Mexico

Like many states, New Mexico has multiple tax rates. One at the state level and another at the local level. The state rate is 5.125% the average local rate is 2.69% (total average rate for New Mexico Sales Tax is 7.82%). This is high for a combined rate.

Broad Sales Tax Base: Similar to HawaiiNorth Dakota, and South Dakota, the State of New Mexico has increased its sales tax base to include many business-to-business personal services.

Property Taxes in New Mexico

The average property tax rate for residential property in the state of New Mexico is 0.68%, making it a very preferable place to own property. The property tax here is ranked as the 4th lowest per capita with average tax collections of only $792.

Unemployment taxes in New Mexico

Unemployment taxes usually consist of three factors. They are the wage base, range of rates, number of schedules. Below is an outline of the three:

  • Wage Base – New Mexico has a wage base of $24,800 for 2020
  • UI Rates – range from 0.33% to 6.40%
  • Schedules – New Mexico has a single rate schedule regarding UI.

New Mexico Business Entities - LLCs

Nex Mexico is the most inexpensive place to set up your LLC in the country (tied with Arizona and Missouri). Here’s what you need to know:

  • New Mexico has no annual LLC fee, yay!
  • When you register with the state, you pay a one time fee of $50
  • Secretary of State of New Mexico website – click here
  • If you would like help setting up your LLC, we recommend using IncFile.com. They are simple and easy to use.

State #20

State #22