New Mexico sales tax at a glance
| Type of tax | Gross receipts tax (on the seller, usually passed on) |
|---|---|
| State rate | 4.875% |
| Local rates | Average 2.80%, highest 4.56% |
| Average combined rate | 7.68% |
| Groceries | Deductible (not taxed)Certified retail food stores deduct sales of food for home consumption, so groceries are not taxed in practice. |
| Prescription drugs | Deductible (not taxed)Receipts from prescription drugs are deductible from gross receipts, so prescriptions are not taxed. |
| Clothing | Taxed (summer holiday, $100 cap)Clothing is taxed, except items under $100 during the back-to-school holiday (31 July to 2 August in 2026) at participating retailers. |
Local averages are population-weighted figures from the Tax Foundation: State and Local Sales Tax Rates, Midyear 2026 (rates as of 1 July 2026). They are a guide, not the rate at any one address. For the exact rate where you buy, use the NM Taxation and Revenue: Gross receipts location code and tax rate map.
Worked examples
A $250 car repair at the average combined rate (7.68%)
| Rate | 4.875% state + 2.8% local = 7.675% |
|---|---|
| Price before tax | $250.00 |
| Sales tax | $19.19 |
| Total | $269.19 |
Working: $250.00 × 7.675% = $19.19. Services such as repairs are taxed under the GRT, unlike in most sales tax states. Your location rate may differ from the 2.8% average local part.
Working back from a $107.68 bill
| Rate | 4.875% state + 2.8% local = 7.675% |
|---|---|
| Price before tax | $100.00 |
| Sales tax | $7.68 |
| Total | $107.68 |
Working back: $107.68 ÷ 1.07675 = $100.00, so the tax was $7.68. At the average combined rate, dividing by 1.07675 shows a price close to $100. Use the rate for your location code for a real bill.
How the gross receipts tax works
GRT is charged on a business's gross receipts, including most services, which makes New Mexico's tax base much broader than a typical sales tax. The business owes the tax, but it may pass it on to customers, and if it does, the tax must be stated separately on the bill. The rate depends on where the goods or services are delivered. The state rate fell to 4.875% on 1 July 2023, and since 1 July 2025 local rate changes take effect only once a year, in July.
Groceries, medicine and the tax holiday
Certified retail food stores can deduct receipts from food for home consumption, and prescription drugs are deductible too, so neither is taxed at the register. Local governments receive hold-harmless payments to make up for the lost food tax. New Mexico's back-to-school tax holiday ran from 31 July to 2 August 2026, covering clothing and shoes under $100 per item, computers under $1,000, computer hardware under $500 and school supplies under $30. Retailers can choose whether to take part.
New Mexico vs. neighboring states
| State | State rate | Avg. combined | Groceries |
|---|---|---|---|
| New Mexico | 4.875% | 7.68% | Deductible (not taxed) |
| Arizona | 5.6% | 8.54% | No state tax; most cities tax it |
| Utah | 6.1% | 7.42% | 3% statewide food rate |
| Colorado | 2.9% | 7.89% | No state tax; local varies |
| Oklahoma | 4.5% | 9.06% | No state tax; local applies |
| Texas | 6.25% | 8.20% | Exempt |
Average combined rates are from the Tax Foundation, midyear 2026 report. See sales tax rates for every state for the full table.