New Mexico does not have a sales tax as known in many other states; instead, it has a gross receipts tax. This tax is imposed on persons engaged in business in New Mexico, but in almost every case the person engaged in business passes the tax to the consumer. In that way the gross receipts tax resembles a sales tax.

What is taxable?
Generally speaking, sales and leases of goods and other property, both tangible and intangible, are taxable. Magazines and over-the-counter drugs are taxable. (Prescription drugs are no longer taxable.) Unlike many other states, sales and performances of services are taxable in New Mexico.

What is the gross receipts tax rate and how is it determined?
The gross receipts tax rate varies throughout the state from 5.375% to 8.6875%. The total rate is a combination of rates imposed by:

• The state,
• The counties, and
• The municipalities

The total gross receipts tax is paid to the state. The state keeps its portion and distributes the counties' and municipalities' portions to them. The state's portion of the gross receipts tax, which is also the largest portion, is determined by state law. Changes may occur, usually in July as the result of legislative action. Changes to municipal and county increments also become effective in January and July of every year.