The legal difference
A sales tax is owed by the buyer; the seller just collects it. New Mexico's gross receipts tax is owed by the seller on total receipts from doing business in the state. You owe it whether or not you add it to the customer's bill.
If you forget to pass GRT through to a customer, you still owe it. The tax comes out of your margin instead.
Pricing and invoicing
Most New Mexico businesses state prices before tax and add GRT as a separate line, which customers read as sales tax. Both approaches are legal: bake it into the price, or itemize it. What matters is that your books treat receipts consistently and your returns report gross receipts correctly.
If you itemize, use your correct location code rate. Check it with the GRT rate lookup each July, when the annual schedule changes.
Services are taxed here
The biggest surprise for owners arriving from sales tax states: New Mexico taxes most services, not just goods. Consultants, contractors, and repair shops all generally owe GRT on their receipts. Some deductions exist, notably for certain sales to out-of-state buyers and for resale, but the default is taxable.
Side by side
| Sales tax states | New Mexico GRT | |
|---|---|---|
| Who owes the tax | The buyer | The seller |
| Services | Usually exempt | Usually taxable |
| Rate basis | Point of sale | Business location code |
| Rate changes | Varies | Each July 1 |
Simplified comparison. Some sales tax states tax some services; some GRT receipts are deductible.
Sources and updates
- NM Taxation and Revenue Department, GRT overview and FYI publications.
- NMSA 1978, Chapter 7, Article 9 (Gross Receipts and Compensating Tax Act).