New Mexico · LLC tax election
New Mexico LLC: S corp or C corp?
New Mexico's cost of being a corporation at all is a flat $50, which is the first number to compare.
See New Mexico at a glanceShort answer
In New Mexico a C corporation pays 4.8% on taxable income up to $500,000 and 5.9% on the excess, and every corporation, S corporations included, owes a $50 annual franchise tax. S status is mostly a question of owner-level tax and payroll savings.
Last checked .New Mexico at a glance
| Question | New Mexico |
|---|---|
| S election recognized? | Yes, New Mexico follows the federal election1 |
| Separate state form and deadline | No separate state form2 |
| Tax the S corp itself pays | minimum $503 |
| C corp rate and minimum | 4.8% to 5.9%, graduated, minimum $504 |
| Entity tax on a default LLC | None for a default LLC5 |
| Personal income tax | Yes, on wages and pass-through income6 |
What is different about New Mexico?
New Mexico's $50 franchise tax is the cheapest entity-level cost in this group of states, and it is owed by every corporation whether or not it earns anything. It applies to S corporations too, and it is reported on the corporate return, Form CIT-1 for C corporations. The corporate income tax is where the S and C paths split. A C corporation pays 4.8% on taxable income up to $500,000, then $24,000 plus 5.9% of the excess. New Mexico also lets a pass-through entity choose to pay tax itself, at the higher of the personal or corporate rate, which the state says is currently 5.9%. The federal return you file decides the state return, so an S corporation files the New Mexico S-Corp return with no separate state election.
Does New Mexico recognize a federal S corp election?
New Mexico follows your federal classification: an entity taxed as an S corporation files the state's S-Corp return, and there is no separate state election form. The cost on top is the $50 annual franchise tax, which the New Mexico Taxation and Revenue Department says every domestic and foreign corporation owes, S corporations included. A pass-through entity can also elect to pay tax at the entity level at the higher of the personal or corporate rate, currently 5.9%.
Does my LLC need a separate New Mexico election or form?
New Mexico has no separate S election form; an S corporation files Form S-Corp, the New Mexico Sub-Chapter S Corporate Income and Franchise Tax Return.2
What does New Mexico tax an S corp or LLC at the entity level?
- Every corporation, S corporations included, owes New Mexico's $50 annual corporate franchise tax whether or not it has income.3
- A New Mexico LLC taxed as a partnership files the pass-through entity return and pays tax at the entity level only if it elects to.5
- Corporations report the $50 annual franchise tax on Form CIT-1 (S corporations use the S corporation return).7
Is a New Mexico LLC taxed as a C corp ever better?
A New Mexico C corporation pays corporate income tax of 4.8% on taxable income up to $500,000 and $24,000 plus 5.9% of the excess over $500,000, under 7-2A-5 NMSA for tax years from 2020. The state's pass-through page still lists 5.9% as the highest corporate rate. It also owes the $50 franchise tax, and files Form CIT-1 by the 15th day of the fourth month after year-end. Owners are taxed again on dividends.
Run your New Mexico numbers
With only a $50 franchise tax, New Mexico adds little cost to S status. What decides it is whether your profit is high enough that self-employment tax savings on distributions beat the added payroll cost. Use the 4.8% and 5.9% corporate rates as the price of staying a C corporation.
Result
How much would a New Mexico LLC owner save as an S corp?
| Taxed as | At $80,000 profit | At $150,000 profit |
|---|---|---|
| Default LLC | $11,304self-employment tax $11,304 + New Mexico LLC tax $0 | $21,194self-employment tax $21,194 + New Mexico LLC tax $0 |
| S corp | $9,394payroll tax $7,344 + New Mexico S corp tax $50 + $2,000 payroll and prep | $15,820payroll tax $13,770 + New Mexico S corp tax $50 + $2,000 payroll and prep |
| C corp | $17,277payroll tax $7,344 + New Mexico tax $1,536 + federal $6,397 + $2,000 payroll and prep | $30,645payroll tax $13,770 + New Mexico tax $2,880 + federal $11,995 + $2,000 payroll and prep |
Assumes a 60% salary9 and a single filer. Income tax is left out. C corp dividends are taxed again.
When is the Form 2553 deadline for a New Mexico LLC, and what if I miss it?
Late relief: federal steps, deadline guide.
What to do next
How to start one, or have us form it from $123.75.
Registered agent $74.25/yr, annual report.
LLC vs S corp guide, election deadline, Form 2553 filed for $165.
More on New Mexico: How to start a New Mexico LLC · How to start a New Mexico corporation · New Mexico LLC cost · New Mexico annual report · Annual report late fees by state
File the S-Corp Election for your New Mexico LLC
We file Form 2553 for a flat $165.
Get the S-Corp ElectionCommon questions
What is the New Mexico corporate income tax rate?
The statute sets 4.8% on taxable income up to $500,000 and $24,000 plus 5.9% of the excess over $500,000. The Taxation and Revenue Department's pass-through page lists 5.9% as the highest corporate rate currently.
Does an S corporation owe the New Mexico franchise tax?
Yes. The franchise tax is $50 per taxable year and applies to every domestic and foreign corporation, including S corporations, whether or not they are actively doing business in the state.
What is the New Mexico pass-through entity tax?
It is an elective entity-level tax charged at the higher of the personal or corporate income tax rate. The Taxation and Revenue Department says the highest rate for both is currently 5.9%, so the entity pays that top rate on its taxable net income.
When is the New Mexico corporate return due?
Form CIT-1 is due on the 15th day of the fourth month following the close of the tax year, which is April 15 for a calendar-year corporation. Fiscal-year and short-year returns use the form for the year in which the period begins.
Sources 10 links, checked Nov 6, 2026
- New Mexico follows the federal classification: the federal return an entity files determines its New Mexico return, and an entity taxed as an S corporation files the New Mexico S-Corp return. tax.newmexico.gov, checked Nov 6, 2026
- New Mexico has no separate S election form; an S corporation files Form S-Corp, the New Mexico Sub-Chapter S Corporate Income and Franchise Tax Return. tax.newmexico.gov, checked Nov 6, 2026
- Every corporation, S corporations included, owes New Mexico's $50 annual corporate franchise tax whether or not it has income. tax.newmexico.gov, checked Nov 6, 2026
- New Mexico taxes C corporation income at 4.8% up to $500,000 and $24,000 plus 5.9% of the excess above that (schedule for tax years from 2020; the state's pass-through page confirms 5.9% as the current top rate), plus the $50 franchise tax. tax.newmexico.gov, checked Nov 6, 2026
- A New Mexico LLC taxed as a partnership files the pass-through entity return and pays tax at the entity level only if it elects to. tax.newmexico.gov, checked Nov 6, 2026
- New Mexico taxes individuals under its personal income tax, whose highest rate is currently 5.9%. tax.newmexico.gov, checked Nov 6, 2026
- Corporations report the $50 annual franchise tax on Form CIT-1 (S corporations use the S corporation return). tax.newmexico.gov, checked Nov 6, 2026
- IRS: Form 1120 instructions, C corp rate irs.gov, checked Nov 6, 2026
- IRS: S corp reasonable compensation irs.gov, checked Nov 6, 2026
- IRS: Form 2553 instructions irs.gov, checked Nov 6, 2026
Last verified Nov 6, 2026.
This page explains the rules; it is not tax advice. Run your numbers with a CPA or enrolled agent before you elect.
Last verified Nov 6, 2026.