Gross receipts tax (GRT) on invoices in New Mexico

New Mexico’s gross receipts tax (GRT) is imposed on your business, though it’s common to pass it on to your customer. Construction is a taxable service that includes the materials built into the project, so a contractor owes GRT on its receipts from the job, materials included, unless an exemption or deduction applies.

GRT: your business’s tax, and a free registration

GRT is imposed on persons engaging in business in New Mexico. Under 3.2.6 NMAC they alone are liable for paying it; they aren’t collectors on behalf of the state. Receipts from performing services in New Mexico are part of your gross receipts.

Anyone who engages in business in New Mexico must register with the Taxation and Revenue Department and receives a New Mexico Business Tax Identification Number. There’s no fee. You can also submit form ACD-31015, Business Tax Registration, at any district tax office by appointment.

Construction is a taxable service, materials included

Under 3.2.1 NMAC, construction is a service, and that service includes all tangible personal property that becomes an ingredient or component part of the construction project. Receipts from performing a service in New Mexico are subject to GRT unless a specific exemption or deduction in the Gross Receipts and Compensating Tax Act applies.

The regulation limits “construction” to the activities listed in Section 7-9-3.4 NMSA 1978 that physically change the land, or physically create, change or demolish a building, structure or other facility, as part of a construction project.

• Construction includes painting structures, installing sprinkler systems and building irrigation pipelines.
• It excludes maintenance work, landscape upkeep, repairing equipment or appliances, hauling to or from the site, surveying, and engineering or architectural services, as well as installing carpets or draperies. A service isn’t construction just because a construction project needs it.

Work outside New Mexico’s definition of construction is still a service, so its receipts are subject to GRT unless an exemption or deduction applies.

Type 6 NTTCs: buying materials and subcontracting

FYI-105 describes two deductions for sales to a person in the construction business. Each needs a Type 6 nontaxable transaction certificate (NTTC), and the construction project must be subject to GRT when it’s finished:

• Materials: your supplier deducts its receipts from selling you tangible personal property that, by design and intent, becomes part of the project. Nails qualify; a hammer doesn’t.
• Subcontracting: a subcontractor deducts its receipts from selling you subcontracting services.

Only construction contractors licensed by New Mexico may apply for and execute these certificates, unless they perform construction in the ordinary course of business and are exempt from the state’s contractor licensing laws. The Department’s NTTC page says a Type 6 requires a contractor’s license verification. Applicants in classifications that no longer need a Construction Industries Division license, such as GS-3 tile, GS-10 fencing, GS-12 flooring and GS-18 painting, can request a Type 6 through the Taxpayer Access Point.

Landscaping on a construction project

Seeding, laying sod or installing landscape items in conjunction with a construction project is a construction service. Rocks, trees, plants, shrubs, sod, seed and other landscaping items sold to a person in the construction business, as an integral part of the project, are construction materials. If you sell those items to a person in the construction business, or seed, lay sod or install them for one, you may deduct those receipts when the buyer gives you an NTTC. Landscape upkeep isn’t construction.

Your invoice: a GRT line, or “tax included”

3.2.6.8 NMAC says a business that reports and pays GRT isn’t required to charge or collect it from the customer. The Department’s sources describe the bill in two ways:

• 3.2.6.8 NMAC and FYI-105: state the tax separately on the bill, or state that GRT is included in the amount billed. A general statement on your bills or invoices that New Mexico tax is included meets this.
• The Gross Receipts Tax Overview page: GRT passed on to the customer must be separately stated on the invoice.

A separate GRT line on your invoice meets both statements.

GRT isn’t part of your gross receipts. When you don’t state it separately, your gross receipts are the total charged divided by 1 plus the tax rate as a decimal. At an illustrative total rate of 8%, a $1,080 bill that includes GRT holds $1,000 of gross receipts and $80 of tax.

Local rates follow the job site

The total GRT rate combines the state’s portion, the rate on this page, with county and municipal rates. You pay all of it to the state, which keeps its portion and distributes the rest to the counties and municipalities. FYI-105 notes that your place of business isn’t always your reporting location. Receipts from construction services and construction-related services for a New Mexico construction project are reported at the location of the construction site, so the job site’s rate applies. The Department’s map gives location codes and rates by address.

Since July 1, 2025, New Mexico’s GRT rates change only in July, except in special situations such as a natural disaster, when a county or municipality can change its rate in January.

Watch-outs for New Mexico contractors

• Progress payments: if you’re an accrual-basis taxpayer, you pay GRT on progress payments as you receive them.
• Sales against an NTTC: when a buyer executes an NTTC to you for a qualifying transaction, the Department’s NTTC page says you don’t pass GRT on to that buyer for it.
• Never show more GRT than you owe: under Section 7-9-6 NMSA 1978, as 3.2.6 NMAC notes, any amount your books show as tax on a transaction, beyond the tax you must report and pay, counts as gross receipts subject to GRT.