Corporate Income & Franchise Tax Overview

A corporation that generates income from activities or sources in New Mexico and must file a federal corporation income tax return or an equivalent return is subject to New Mexico Corporate Income Tax.

Such corporations must file a New Mexico form CIT-1, Corporate Income and Franchise Tax Return.

A corporation that has, or exercises, its corporate franchise in New Mexico is subject to the Franchise Tax, even if the corporation is not actively engaging in business in New Mexico or owes no New Mexico Corporate Income Tax. Taxpayers must use form CIT-1, Corporate Income and Franchise Tax Return to report the $50 annual Franchise Tax.

Exempt from New Mexico Corporate Income Tax and Franchise Tax are:

• Insurance companies, reciprocal or inter-insurance exchanges which pay a premium tax to the state;
• Trusts organized or created in the United States and forming part of stock bonus, pension or profit-sharing plans of an employer for the exclusive benefit of his employees or their beneficiaries, if the trust is exempt from taxation under the United States Internal Revenue Code; and
• Nonprofit organizations such as religious, educational and benevolent organizations exempt from income tax under the Internal Revenue Code, unless the organization has “unrelated business income” taxed under that Code.

For a detailed overview of New Mexico Corporate Income and Franchise Taxes, see publication FYI-350: Corporate Income Tax and Corporate Franchise Tax.

Corporate Income Tax

New Mexico imposes its corporate income tax on the net income of every domestic corporation and every foreign corporation that:

• Is employed or engaged in the transaction of business in, into, or from this state, or
• Has income from property or employment within this state.

A “corporation” is a:

• Corporation;
• Joint stock company;
• Real estate trust organized and operated under the Real Estate Trust Act;
• Financial corporation;
• Bank, or other business association; or
• Limited liability company or partnership taxed as a corporation under the United States Internal Revenue Code.

“Net income” generally is federal taxable income adjusted to exclude amounts not taxable by states.

Franchise Tax

New Mexico Corporate Franchise Tax is the obligation of every domestic and foreign corporation, including S corporations, that either engages in business in New Mexico or exercises its corporate franchise in this state, whether actively engaged in business or not.

A corporation exercises its corporate franchise when it seeks treatment as a legal entity or person who is subject to the jurisdiction of, and privileges provided by, state law. Indications of exercise of a corporate franchise include, but are not limited to:

• Registering with the Public Regulation Commission;
• Registering with any regulatory agency of the state;
• Appointing a registered agent in this state to accept service of legal process on behalf of the corporation;
• Appointing any agent to carry on activity within this state;
• Using the New Mexico judicial system to enforce contractual provisions or to collect debt;
• Owning property located in this state;
• Registering trade names with the state; or
• Filing legal documents for public notice with any county clerk in this state.

Registering and Dissolving Corporations

To obtain a certificate of incorporation or to dissolve a corporation, you must contact the Secretary of State (SOS), which regulates corporations in this state.

Contact Information

US Postal Service Delivery:
New Mexico Taxation and Revenue Department
Corporate Income Tax
P.O. Box 25127
Santa Fe, NM 87504-5127

UPS/FedEx Delivery:
New Mexico Taxation and Revenue Department
Corporate Income Tax Unit
Manuel Lujan, Sr., Building
1200 S. St. Francis Drive
Santa Fe, NM 87505

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

Links

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Statutory Reference: Look for Chapter 7, Article 2A NMSA 1978  in the New Mexico State Statutes.
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