Corporate Income and Franchise Tax 

Every business that generates income from activities or sources in New Mexico and files a federal corporation income tax return or an equivalent return must file a New Mexico corporate income tax return.

Corporate Income Tax


Generally, a corporation must  file a New Mexico Corporate Income and Franchise Tax Return if it is:

  • organized under New Mexico laws. This is true whether the corporation has New Mexico income or not; 
  • an out-of-state corporation deriving income from business transactions, property, or employment in New Mexico;
  • exempt from federal income tax under the Internal Revenue Code but with unrelated business income, or
  • a business entity required to file a federal income tax return. These include partnerships and limited liability companies treated as corporations by the IRS.
  • Corporate income tax dollars go first to the Tax Administration Suspense Fund. After refunds, credits and interest are paid, unencumbered balances are transferred monthly to the General Fund.

Every New Mexico corporation and every foreign corporation transacting business in New Mexico must pay a corporate franchise tax in the amount of $50.00.

For specifics on these taxes, see Publication FYI-350, Corporate Income Tax and Corporate Franchise Tax, linked below.

Contact Information


New Mexico Taxation and Revenue Department 
P.O. Box 25127
Santa Fe, NM 87504-5127

For assistance, call (505) 827-0825.Or for tax return help, email us at CIT@state.nm.us


Links


Manage your account online
FYI-350, Corporate Income Tax and Corporate Franchise Tax
Statutory Reference: Look for Chapter 7, Article 2A NMSA 1978  in the New Mexico State Statutes

Frequently Asked Questions

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Q. Are insurance companies required to file a New Mexico Corporate Income Tax (CIT) return?

Answer:
No, as an insurance company or reciprocal or underinsurance exchange that already pays a premium tax to New Mexico, you are exempt.

Q. Are 501(c) Homeowners Associations required to file a New Mexico CIT return?

Answer:
No, as a501(c) Homeowners Association, you are not required to file a New Mexico CIT return unless you have unrelated business income at the federal level. In that case you are required to file a CIT return and pay Corporate Income and Franchise tax.

Q. How does New Mexico treat S Corporations and Qualified Subchapter S Subsidiaries (QSSSs) that file a New Mexico CIT return?

Answer:
New Mexico follows federal practice. If QSSSs are reported in the parent’s CIT return, New Mexico accepts a return on the same basis. The return is the “election.” No separate election is necessary. Note: Each corporation included on the parent’s return, having exercised its corporate franchise in New Mexico, is subject to the franchise tax.

Q. When is an entity responsible for filing and paying franchise tax?

Answer:
If the entity, a C or S Corporation, exercises its franchise in New Mexico during the tax year, it is responsible for filing and paying franchise tax. The entity must be registered with the Taxation and Revenue Department or with the Public Regulatory Commission and have New Mexico property, payroll or sales for the tax year.

Q. If a corporation was a C corporation in the previous year and elects federal S status, does it automatically become a New Mexico S corporation for tax in the current year?

Answer:
Yes, provided the IRS granted the election. Please provide a copy of the approved election when filing the S corporation return.



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