Key figures
New Mexico accounting
2026, with sources
A flat 5.9% and a $50 franchise tax
New Mexico taxes corporations at a flat 5.9% of New Mexico taxable income for tax years beginning on or after January 1, 2025. Until 2024 the first $500,000 was taxed at 4.8%; HB 252 removed that bracket and, in the same act, brought Subpart F income into the base. The income tax starts from federal taxable income.
On top of the income tax, every corporation that holds or exercises its franchise in New Mexico pays a $50 franchise tax, reported on Form CIT-1. It is owed even in a loss year, even when the corporation is protected from income tax by P.L. 86-272, and separately for each corporation in a combined group.
Combined reporting and apportionment
HB 6 (2019) made worldwide unitary combined reporting the default for tax years starting in 2020, with elections for a water’s-edge group or a federal consolidated group, each binding for seven years. A Delaware parent with an operating subsidiary will usually be one combined filer.
Apportionment uses an equally weighted three-factor formula of property, payroll and sales, with single sales factor available only to qualifying manufacturers and headquarters operations. Receipts from services and intangibles are sourced to the market. For a remote-first company, that means New Mexico employees pull income into New Mexico through the payroll factor even when few customers are there.
An example
A ten-person SaaS company with two engineers in Albuquerque and a handful of New Mexico customers has a small New Mexico payroll factor, a small sales factor and no property. Its New Mexico taxable income is its combined federal income multiplied by the average of those three ratios, taxed at 5.9%, plus $50 of franchise tax for each corporation in the group. In a loss year the provision shows only the franchise tax.
The federal baseline
This page covers what New Mexico adds. The federal rules underneath it apply here too.
Common questions
What is New Mexico’s corporate rate for a small company?
From 2025, a flat 5.9%. HB 252 removed the 4.8% rate that used to apply to the first $500,000 of taxable income, so a small company no longer gets a lower bracket. Every corporation also pays the $50 franchise tax on the same CIT-1 return.
Do we file a combined return with our parent?
By default, yes. Since 2020 New Mexico requires worldwide unitary combined reporting. A group can elect water’s-edge or, if it files a federal consolidated return, a consolidated-group return instead; either election binds for seven years, so it’s worth choosing deliberately the first time.
Accounting next door
- AZArizona accountingA 4.9% corporate income tax with a $50 minimum, on an Internal Revenue Code frozen at a fixed date the legislature moves each year — to January 1, 2026 as of June 2026.
- UTUtah accountingUtah’s corporate franchise and income tax is 4.45% of net income for 2026, with a $100 minimum, apportioned on sales for most companies.
- COColorado accountingA flat 4.4% corporate income tax on federal taxable income, apportioned on sales. Conformity is rolling, with a 2026 decoupling from the federal FDDEI deduction.
- OKOklahoma accountingOklahoma taxes corporations at a flat 4%, apportions by three equal factors, repealed its franchise tax after 2023, and wants Form 512 30 days after the federal due date.
- TXTexas accountingTexas has no corporate income tax. It taxes a company’s margin through the franchise tax, at 0.75%, and nothing is due below $2,650,000 of revenue for 2026 and 2027 reports.
Founder guides on this
- US GAAPUS GAAP for early-stage startups, in plain EnglishAccrual accounting, revenue recognition (ASC 606), leases (ASC 842), stock compensation and capitalized software: what each means for a small company.
- R&D taxThe R&D tax credit and Section 174A for startupsEngineering salaries can earn a federal R&D credit against payroll tax, and Section 174A lets you deduct US research again. What qualifies, what to track.
- FundraisingAudit-ready books before your Series AInvestors, lenders and auditors ask for the same things: accrual statements, reconciled accounts and support for every balance. How to be ready first.
More of the New Mexico guide
- ReceivablesReceivables and sales tax in New MexicoSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in New MexicoPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- PayrollPayroll taxes and employer rules in New MexicoWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in New MexicoRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in New MexicoCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.