New Mexico's Gross Receipts Tax: What Nonprofits Need to Know
New Mexico's tax structure is unusual. Unlike most states, NM has a gross receipts tax rather than a traditional sales tax, and the rules for nonprofits are nuanced.
NM Nonprofits · September 11, 2026
New Mexico does not have a traditional sales tax. Instead, businesses and organizations that sell goods or services in the state pay a Gross Receipts Tax (GRT) on the total receipts from those transactions. The distinction matters for nonprofits because unlike federal income tax, which 501(c)(3) organizations are generally exempt from, GRT applies to many nonprofit activities and requires active management.
What Is the Gross Receipts Tax?
The GRT is imposed on businesses and organizations that engage in transactions in New Mexico. The rate varies by municipality and county: the state base rate is 5 percent, but local additions bring the combined rate to between 5 and 9 percent depending on where the transaction takes place. Albuquerque, Santa Fe, and other cities have their own local components layered on top of the state rate. You can look up the current combined rate for any New Mexico location using the New Mexico Taxation and Revenue Department's rate table.
The tax applies to the gross receipts from selling goods, leasing property, and performing services in New Mexico. The seller, not the buyer, is technically responsible for paying the tax, though it is commonly passed on to customers as a line item on invoices.
How GRT Applies to 501(c)(3) Nonprofits
Having federal 501(c)(3) status does not automatically exempt an organization from New Mexico GRT. The GRT is a state tax, and New Mexico provides only specific, narrow exemptions. Whether your organization owes GRT depends on what kinds of transactions generate your revenue.
Activities that are typically subject to GRT for nonprofits include selling tickets to events or performances, selling merchandise or artwork, renting space or equipment to third parties, providing fee-for-service programs (classes, workshops, consulting), and licensing content or intellectual property. Activities that may be exempt, depending on exact circumstances, include grants and charitable donations received (these are not transactions and are generally not subject to GRT), membership dues for non-transactional memberships, and certain government contracts with specific GRT deduction provisions.
Specific Exemptions Available to Nonprofits
New Mexico law provides some GRT exemptions relevant to nonprofits. Organizations that provide certain healthcare services may qualify for an exemption on those receipts. Nonprofit educational institutions may qualify for exemptions on tuition and educational services. Arts organizations that receive government grants may be able to deduct those receipts if the grant is structured correctly. The rules are specific and change over time, so consulting a New Mexico CPA or tax attorney familiar with GRT is strongly recommended.
One important exemption worth knowing: receipts from sales made to a 501(c)(3) organization for the organization's use may be deductible for the seller (not the nonprofit buying). This means that if you are purchasing goods or services for your nonprofit's use, you can provide your GRT exemption certificate to the vendor, who can then deduct those receipts from their taxable gross receipts, effectively eliminating the GRT on that purchase. To use this, your nonprofit must apply for and receive a New Mexico CRS (Combined Reporting System) identification number and a certificate of exemption.
Getting Registered
If your nonprofit has GRT obligations, you need to register with the New Mexico Taxation and Revenue Department and obtain a CRS identification number. You will then file GRT returns, typically monthly or quarterly depending on your volume of taxable receipts. Filing is done online through the Taxpayer Access Point (TAP) on the Taxation and Revenue Department's website. Even if you believe your receipts are exempt, registering and filing returns showing zero taxable receipts is often advisable to document your position.
Artists and the GRT
Individual artists in New Mexico who sell their work, whether at galleries, markets, or directly from their studios, are subject to GRT on their sales. An artist selling a painting for $1,000 in Albuquerque will owe approximately $8.50 to $9.00 in GRT per $100 of sales. Most artists either absorb this cost or add it to the purchase price. Gallery consignment sales are typically handled by the gallery, which collects and remits GRT on the full sale price. Confirm with each gallery how they handle GRT before agreeing to a consignment arrangement.
Artists who also teach classes, lead workshops, or provide any fee-based services need to register and remit GRT on those receipts as well. The GRT applies regardless of whether you are an entity or a sole proprietor.
Staying Compliant
GRT non-compliance in New Mexico can result in penalties, interest, and back taxes that accumulate quickly. The Taxation and Revenue Department conducts audits, and nonprofit status does not protect you from scrutiny if you have unreported taxable receipts. The safest approach is to work with a New Mexico accountant who handles nonprofit GRT questions regularly, document your tax positions in writing, and file returns consistently even when you believe receipts are exempt. When in doubt, file with zero taxable receipts and a note explaining the exemption claimed, rather than not filing at all.