New Mexico’s franchise tax is a $50 fee that corporations pay for the privilege of doing business in the state. The fee seems tiny compared to other states, but skip it and you'll face penalties that quickly add up.
This flat fee applies to both domestic New Mexico corporations and foreign corporations doing business there. Even with zero income or completely dormant operations, you still owe the $50 New Mexico franchise tax.
Here's the catch: you can't just mail a check. The franchise tax must be filed with your corporate income tax return, creating paperwork that many multistate businesses miss until penalties arrive.
Let's examine the specific requirements to ensure your business entities remain compliant.
In practical terms, if your organization operates as a corporation in New Mexico, you owe the $50 franchise tax. This includes C-corporations, S-corporations, and LLCs that elected corporate tax treatment.
Each legal entity pays its own $50 franchise tax, even within corporate groups filing combined returns.
Four types of entities are exempt from paying New Mexico’s franchise:
Partnerships, LLCs taxed as partnerships, S-corporations electing pass-through treatment, and personal service corporations choosing PTE status don't pay the franchise tax. Instead, they file the PTE Return.
The fastest route to file the franchise tax is through New Mexico's official WebFile system. You’ll select "File Corporate Income & Franchise Tax (Form CIT-1), check your entity information, confirm the tax period, and pay the $50 fee via ACH debit or credit card. You'll receive immediate confirmation and a downloadable receipt.
Your New Mexico franchise tax return is due on the 15th day of the fourth month after your tax year ends. That’s April 15 for calendar-year corporations.
For short-year returns, your deadline follows the same pattern: the 15th day of the fourth month after your short tax year ends.
Miss the payment deadline? You'll face a 2% penalty for each month or partial month you're late, up to 20% of the tax owed. New Mexico also charges interest on unpaid taxes at the daily rate set by the IRS, which the state adopts each January 1st.
For corporations operating less than a full year, the tax is prorated based on months of existence. Simply multiply $50 by the fraction of the year operated (e.g., six months = $50 × 6/12 = $25).
The proration counts complete months, with any partial month counting as a full month for franchise tax purposes.
For organizations that need to manage multiple entities across different states, coordinating various franchise tax requirements can become time-consuming and complex. New Mexico's relatively straightforward $50 fee may seem minor, but missing deadlines can lead to penalties and affect your good standing in the state.
Discern helps you streamline entity management by handling all your franchise tax requirements and annual reports. Setup takes only minutes and covers all 51 jurisdictions, allowing you to focus on running your business rather than tracking various state deadlines and requirements.
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