Key figures
New Mexico payables
2026, with sources
GRT on what you buy
Because New Mexico taxes the gross receipts from services, payables here look different: New Mexico contractors, agencies and service vendors usually add GRT to their invoices. It is their tax, passed on, and it is part of the cost of the service.
When a New Mexico company buys taxable property or services from a seller that didn’t pay GRT — typically an out-of-state vendor without nexus — it owes compensating tax instead, reported on its own TRD return.
1099s and contractors
New Mexico wants copies of 1099s that show New Mexico withholding with the annual withholding reconciliation. There is no general withholding on payments to nonresident contractors for ordinary services.
A contractor working in New Mexico is in business there and may have its own GRT registration. DWS decides employee status for unemployment insurance on its own test, and a reclassified worker brings unpaid contributions.
An example
A startup hires a Santa Fe design studio for $20,000. The studio’s invoice adds GRT at the Santa Fe rate, which the startup pays as part of the cost. Had the startup hired a studio with no New Mexico nexus for work delivered to its Albuquerque office, it would owe compensating tax itself.
The federal baseline
This page covers what New Mexico adds. The federal rules underneath it apply here too.
Common questions
Why are vendors charging us gross receipts tax on services?
Often, yes. New Mexico’s gross receipts tax applies to services, so an in-state consultant or a remote vendor over the $100,000 threshold may add GRT to the invoice. It is a legitimate pass-through of the vendor’s tax, not a sales tax the vendor is collecting for the state.
What is compensating tax?
When the company buys property or certain services for use in New Mexico from a seller that didn’t pay GRT on the sale, it owes compensating tax — New Mexico’s use tax — reported on the same TRD return.
Payables next door
- AZArizona payablesArizona collects 1099s that show Arizona withholding with the A1-R by Jan 31, offers a statutory contractor declaration, and charges use tax on untaxed SaaS.
- UTUtah payablesUtah wants 1099s that show Utah withholding by Jan 31, has no contractor withholding, and charges use tax on software, SaaS included, used in Utah.
- COColorado payablesColorado wants only 1099s that show Colorado withholding, by Jan 31. Use tax applies to untaxed purchases, and home-rule cities can tax software the state doesn’t.
- OKOklahoma payablesOklahoma classifies workers with a common-law control test, and use tax reaches tangible goods bought without Oklahoma tax rather than most SaaS.
- TXTexas payablesNo state 1099s and no contractor withholding. What Texas does reach in payables is use tax on untaxed software and TWC’s direction-or-control test for contractors.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- Sales taxSales tax nexus for startups: when you owe tax in a stateSince Wayfair, selling into a state can create a sales tax obligation. How economic nexus works, why SaaS is taxable in some states and when to register.
More of the New Mexico guide
- AccountingAccounting and state tax in New MexicoCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in New MexicoSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- 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.